The Many Benefits Of Franchising

Franchising is​ practiced in​ many business establishments today. With franchising, the franchisor generally licenses its trademarks and​ business modus operandi to​ the franchisee. this​ is​ done in​ exchange of​ a​ recurring payment from the franchisee which may be a​ percentage of​ gross sales or​ gross profits and​ annual fees. Businesses working as​ franchise arrangement are referred to​ as​ chain​ store, franchise or​ franchise outlet.

The advantage of​ franchising lies in​ the fact that the franchisor is​ still in​ command​ of​ the financial part of​ the business. The franchisee only pays the franchising fees and​ other commitments while the assets are controlled by the company. Moreover, with franchising, the franchisor provides trained employees for​ the franchise. in​ fact, if​ required, they will also provide the necessary training to​ the employees, wherein​ the franchisees save in​ training costs.

When entering into a​ franchise agreement, it​ is​ necessary for​ the franchisee to​ pay some capital amount as​ security deposit to​ the franchisor. With this​ payment, the franchisee runs the franchise with the needed dedication​ as​ they will not want to​ lose the capital sum to​ the franchisor. as​ the company would have already had a​ good standing in​ the market, and​ allots franchises just to​ expand, there is​ not much of​ a​ hassle in​ getting customers, and​ business to​ the franchise.

Franchising helps in​ the growth of​ a​ business as​ there are no limits to​ the number of​ franchises to​ a​ company. it​ is​ in​ fact much easier to​ open franchises of​ a​ company, than branches of​ a​ business as​ the cost involved is​ much lower. Moreover, the franchise receives franchise fee, franchise royalty, better lease options, discounts on​ equipment and​ raw materials and​ discounts from vendors. So they basically have more money to​ run the franchise than an​ individually owned company or​ companies.

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