Advantages and Disadvantages of Franchising: A Comprehensive Overview
Franchising offers numerous advantages such as reduced financial risk, proven business models, and access to a successful operational framework, enabling franchisees to avoid the lengthy trial and error phase of starting a new business. Franchisees benefit from established brand recognition, collective purchasing power, and the support of a larger organization. However, they also face challenges like dependency on the franchisor, limited control over brand decisions, and profit sharing with the franchisor. Understanding these aspects is crucial for potential franchisees.
Advantages and Disadvantages of Franchising: A Comprehensive Overview
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Presentation Transcript
Franchisee-Advantages Avoiding the unnecessary trial and error period in starting and operating a new business. Lower financial risk, compared to other ventures, because investment costs are lower and profit margins are higher. Business Format Franchising complete packages ensure a ready to go “turn-key” franchised unit. Managing a small business whilst depending on the power of the franchisor company which has a bigger organization. The franchisee has an opportunity to run a proven business concept with a successful operational track record. The franchisee has access to accumulated business experience and technical know-how in managing the business. Easier purchasing, storing, and product display systems.
Franchisee Disadvantages • Value of brand name determined by franchiser(owner of brand) • Introduction of new products determined by franchiser • Your reliability tied to the rest of the system • Some of the profit need to give to the franchiser
Newspapers Magazines Radio Television Outdoor Media Yellow Pages Internet Major Advertising Media
Newspapers Advantages Disadvantages • Limited demographic selectivity • Limited color • Low pass-along rate • May be expensive • Geographic selectivity • Short-term advertiser commitments • News value and immediacy • Year-round readership • High individual market coverage • Co-op and local tie-in availability • Short lead time
Magazines Advantages Disadvantages • Long-term advertiser commitments • Slow audience build-up • Limited demonstration capabilities • Lack of urgency • Long lead time • Good reproduction • Demographic selectivity • Regional/local selectivity • Long advertising life • High pass-along rate
Radio Advantages Disadvantages • No visual treatment • Short advertising life • High frequency to generate comprehension and retention • Background distractions • Commercial clutter • Low cost • Immediacy of message • Short notice scheduling • No seasonal audience change • Highly portable • Short-term advertiser commitments • Entertainment carryover
Television Advantages Disadvantages • Short life of message • Consumer skepticism • High campaign cost • Little demographic selectivity with stations • Long-term advertiser commitments • Long lead times for production • Commercial clutter • Wide, diverse audience • Low cost per thousand • Creative opportunities for demonstration • Immediacy of messages • Entertainment carryover • Demographic selectivity with cable
Outdoor Media Advantages Disadvantages • Short message • Lack of demographic selectivity • High “noise” level • Repetition • Moderate cost • Flexibility • Geographic selectivity
Internet Advantages Disadvantages • Difficult to measure ad effectiveness and ROI • Ad exposure relies on “click through” from banner ads • Not all consumers have access to Internet • Fast growing • Ability to reach narrow target audience • Short lead time • Moderate cost
