Small and medium-sized enterprises must develop a strategy to thrive. One of the strategies developed is the franchising system. The franchising system, which has been implemented in the USA since 1950, has spread all over the world since the 1970s.
So, if you want to know about franchise opportunities in Texas and want to know what the advantages and disadvantages of the franchise, you are in the right place! PuffCity explains every single detail for you.
Advantages of Franchising System
Let us list the advantages of the franchising system from the franchisor and franchisee’s point of view.
Thanks to the franchising system, the franchisor can make a profit by making franchisees entitled. Franchisor provides the opportunity to start a business without having to find customers.
The franchisor shall not make any establishment and fixed costs. The franchise will not have any difficulties in supplying products.
The franchisor shall not have any problem in terms of personnel recruitment and wages to be given to the personnel. Since the administration and operation will be carried out by the franchisor, the franchise will not encounter any problems when it is first started.
Although Franchisor does not spend any installation expenses for the established company, it will be able to generate income through the name right. Since the franchise will be the branch of a big company, it will not have any difficulty in obtaining credit.
It is a great advantage for the franchise to do advertising work by the franchisor. In addition, since the franchise will be one of the franchisor’s branches, the company will be able to benefit from the financial and legal advisors of the firm.
The training to be provided by the franchisor will prevent the franchise from making a mistake with its inexperience.
The cost of the franchising branch will be reduced as the branch will benefit from the projects of the franchiser in decoration and furniture.
The franchising company can easily achieve its growth goal by franchising. This means that someone who is looking for franchise opportunities in Texas can grow rapidly.
Disadvantages of Franchising System
Let’s examine the disadvantages of franchising system in terms of franchisee and franchisor.
A franchisor advancing towards becoming a large company can be affected by any damage to the brand by the franchise. Therefore, it is useful to check the branches frequently. As for the franchise, it will be constrained to create innovations as it will have to follow the rules set by the company.
In terms of the franchise, there are restrictions in terms of products to sell. In general, the franchisor has to sell the products specified.
Dealer owners do not need to renew the contract when the dealership contract expires. This is another disadvantage in terms of the franchise.
Since the franchisee is obliged to pay royalties continuously, it will affect the profit margin of the franchise.
Since franchising is a legal process, the franchisor must make the necessary legal arrangements and work with an experienced lawyer or consultant.
Although the franchising system is an important system for the growth of the franchisor, the establishment of the entire infrastructure and legal processes are under the responsibility of the franchisor and the problem of the franchisee requires a certain fee to be paid. This is a disadvantage for the franchisor.
We’ve reviewed franchise opportunities in Texas for you today. If you want to work with PuffCity, please contact us immediately and our professional team will help you.