Question

1. What is franchising?
2. What is the advantage and Disadvantages of the franchising business structure?

Answer 1

Franchising a type of business structure in which a franchisee is taking a contract with the franchisor to use the name of the brand of the franchisor in order to sell the goods of the franchisee so that he can be branding his goods as the franchisor food and he will be making a higher amount of profits by selling through the outlets of franchisees by paying him at upfront fees known as franchise fees.

Advantages of franchising are as follows-

A. Franchising is always associated with the higher success rate.

B.there will be cost reduction on the part of the franchisee because he will just be using this service by paying a small amount of franchise fees.

C.there would be marketing assistance and staff training by the franchisor to franchisees so it will be helpful in human resource development.

D. There will be use of brand power of the franchisor in order to make higher profit for franchisee.

Disadvantages related with franchising as follows-

A. This is a time consuming process and this will be leading to loss of time

B.there would be control in the business also so there would be undue interference by the franchisor in the franchisee business

C.it has often been seen that the franchisor is not providing adequate support to the franchisee and it can lead to a lot of misunderstanding

D.if the franchisee is not managing the cost properly then it can be highly expensive in nature because it is an additional cost in relation of its overall business.