What is Franchising?Advantages and Disadavnatges.

 What is Franchising?

It is defined as:
“An agreement between two parties in which one party passes on the rights to the other
party”
Or
“A contractual license granted by one person (the franchisor) to another (the franchisee).”

Advantages of Franchising
 Franchiser gets a large amount of money from franchisee as fee while using its
name.
 Franchisee gets access to big business.
 Failure rate of franchise business is lower than any other business.
 Franchisee uses world wide tested brand and tested procedures that is why failure
rate is lower in this type of business.
 Franchiser provides guidance to franchisee in all affairs of the business.

 Choice of location
 Franchiser is always there to support the franchisee in all kinds of matters

 

Disadvantages of Franchising
 High cost.
 Proportionate profit is given to franchiser by franchisee every year.
 There are too many restrictions from franchiser on the franchisee.