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The
Benefits of Franchising
The following benefits provide a good rationale
for starting a business by purchasing a franchise.
 LOWER
RISKS
Business experts agree that a franchise operation has a lower risk
of failure than an independent business. Statistics suggest that
a franchise is more likely to succeed than an independent business.
ESTABLISHED
PRODUCT OR SERVICE
A franchisor offers a product or service that has sold successfully.
EXPERIENCE
OF FRANCHISOR
The experience of the franchisor's management team increases the
potential for success. They have special knowledge about the business
they are in, and the products and services they are selling.
GROUP
PURCHASING POWER
Lower costs of goods sold result from the group purchasing power
of all franchises. Franchisors often have a very high level of negotiating
power.
NAME
RECOGNITION
Established franchisors can offer national or regional name recognition.
EFFICIENCE
IN OPERATION
Franchisors discover operating and management methods that benefit
new franchisees. Operational standards set in place by the franchisor
also control quality and uniformity among franchisees.
MANAGEMENT
ASSISTANCE
A franchisor provides management assistance to a franchisee. This
includes accounting procedures, personnel management, facility management,
etc. An individual with experience in these areas may not be familiar
with how to apply them in a new business. The franchisor helps a
franchisee overcome this lack of experience.
BUSINESS
PLAN
Most franchisors help franchisees develop a business plan. Many
elements of the plan are standard operating procedures established
by the franchisor. Other parts of the plan are customized to the
needs of the franchisee.
START-UP
ASSISTANCE
The most difficult aspect of a new business is the start-up. A franchisor
has a great deal of experience accumulated from helping its franchises
with start-up. This experience will help reduce mistakes that are
costly in both money and time.
MARKETING
ASSISTANCE
A franchisor typically offers several marketing advantages. The
franchisor can prepare a plan for the development of professional
advertising campaigns. Regional or national marketing done by the
franchisor benefits all of the franchises. In addition, the franchisor
can provide advice about how to develop effective marketing programs
for a local area.
PROVEN SYSTEM OF OPERATION
An attractive feature of most franchises is that they have a proven
system of operation. This system has been developed and refined
by the franchisor. A franchisor with many franchises will typically
have a highly refined system based upon the entire experience of all
of these operations.
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