The experts identified the main advantages and disadvantages of franchising

For both sides of franchising has its pros and cons that you need to know before you sign a contract for this service.

Franchising is one of the most convenient systems of business organization, which is used as the “sharks” of private enterprise and those who only dream about own business. Actually, therefore, the franchise market has been actively developing since the 20th century.

Is the franchise that the owner of an existing and developing company transfers the right to use the goods and services to another businessman who has no ideas to create a new commercial product. The first businessman called the franchisor, while the second franchisee.

The advantages for both parties of the contract of franchising:

1. The expansion of the business. Due to the franchisee from the franchisor rapidly evolving business and it receives, so to speak, passive revenue from promoting your own product or service.

2. The absence of risks. In this case, the franchisor no risks when transfers the right to manage the franchise to a third party, as the second will be responsible for it. Franchisee also does not risk as not buying a pig in a poke.

3. Savings on advertising. Franchising involves the fact that the franchisor no longer need to spend money on advertising, because for him it is already done by the franchisee (there may be several). As the franchisee becomes already promoted the franchise and spends the least money on its promotion.

Disadvantages of cooperation between franchisor and franchisee:

1. The franchisor may lose their “name”. Unscrupulous franchisees can easily zagrabiti business (brand), which was created over the years.

2. Franchising requires investment. Not every aspiring businessman can afford buying a known brand and this is a significant drawback. The cheaper the product, the harder it will be to make it, as it may be still insufficiently popular.

3. Plagiarism. Franchisees can distribute the trade secrets of the franchisor and thereby create extra competition when the product will cease to be the best of the best. In such cases, the plagiarism is much cheaper and gaining popularity very quickly.

In any case, no matter how risky was not the shortcomings of the franchise, today is the most convenient way to organize your own business and become a successful entrepreneur with minimum cost.

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