When you start a business as a supermarket or a fastfood restaurant then you can consider if you are going to start an independent business or going to take a franchise. There are advantages and disadvantages of taking a franchise and also as the franchise giver. Some of the advantages are that you do not have to take care of every aspect involved running a business when you take a franchise. You will get lots of assistance when running a buisness. For example business assistance.
You will get business assistance as the franchise taker.
It takes years to have running an established business. This means time and effort to maintain a brand. Also you need to have an experienced team of dedicated employees to serve the need of your customers. If you take a franchise there will be recruiting, payroll, equipment and training given to establish a profitable business much sooner than an independent business. Most of the franchise givers offer the knowldge base to have a reliable team of workers running your business. There will be data offered to build a customer base.
The franchise taker do not have to build their own brand.
When establishing a brand you need to spend lots of money on advertising and your need to look for the right source to reach the targeted market. To become a household name you need to win the customers trust. You need to let the prospects know that you have the right product for the right price they need. When you take a franchise you will be given the brand name and also the equipment to maintain a profitable buisness. The franchise giver has buildt their reputation as an expert in the business to make money for you as the franchise taker.
Less chance to fail as a franchise taker.
There are lots of aspects such as training of the employees and payroll of the employees taken care of by the franchise giver. This means you do not need to train the employees self. Because you are not the only franchise taker. There will a collective benefits for you as the franchise taker. The costs will be reduced for example because the overall costs will be shared by the franchise takers. Because the franchise formula is a proven concept there will be a lots of customers attracted by the formula and the overall advertising costs also will be less. If you start an independent business and depending on what your products you sell are what your market is there will be advertising costs.
The franchise formula buys in bulk.
The overall buying power is a great advantage to the franchise taker because when you buy your goods as an independent business at a supplier there will be relative larger amount of costs. And if you are going to produce your product as a relative small factory then you will not able to produce massive amounts. There is the possibility to order at the franchise formula to stock your business to share the production costs with the other franchise takers. This will be less effort for you as the franchise taker to order and maintain relationships with the suppliers.
Relative higher profits than an independent business.
The profits are higher because the brand is established by the franchise formula. The clientele base will be larger because there is a targeted advertising to a massive market depending on the which franchise formula it is. If you start a business of your own you need also business loan in most cases. Then there will be interest costs to add to your products you sell to cover the costs of your business loan. In case of taking a franchise you can make more profits because you have the advantage paying an initial costs of the franchise fee. Because you have a brand then you can be sure the other franchise takers before you have build a reputation which is established. The profits will be higher only because of the brand's reputation.
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