Question

Explain the international franchise advantages and disadvantages

Answer 1

Answer:

Advantages:

There is a higher likelihood of success since a proven business formula is in place. The products, services, and business operations have already been established.

– Bankers usually look at successful franchise chains as having a lower risk of repayment default and are more likely to loan money based on that premise.

– The corporate image and brand awareness is already recognized. Consumers are generally more comfortable purchasing items they are familiar with and working with companies they know and trust.

– Franchise companies usually provide extensive training and support to their franchisees in effort to help them succeed.

– Many times products and services are advertised at a local and national level by the main franchise companies. This practice helps boost sales for all franchisees, but individual franchisees don’t absorb the cost.

Disadvantages:

– Franchises can be costly to implement. Also, many franchises charge ongoing royalties cutting into the profits of franchisees.

– Franchisors usually require franchisees to follow their operations manual to a tee in order to ensure consistency. This limits any creativity on the part of the franchisee.

– Franchisees must be very good at following directions in order to maintain the image and level of service already established. If the franchisee is not capable of running a quality business or does not have proper funding, this could curtail success.

Sometimes franchisors may be lax on their commitment to support the franchisee. Also, they may make poor decisions that would have an ill effect on the franchisee. Therefore, it is important to research any franchise concept thoroughly before signing any agreements.

Benefits on International Franchising

Purchasing a franchise is one way for an entrepreneur to get started in business. Franchises offer a proven business model to follow as well as support in areas like financing and training. International franchises can provide the opportunity to take advantage of growing global markets, although the franchisee will need to overcome the hurdles associated with adapting to the ways of a new country.

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