Benefits & Problems With Franchising

The decision to sell franchises of a business is one that should not be taken lightly. Although there are many benefits to franchising, there are also many problems that can develop. Before deciding to take on franchisees, it is vital to understand the benefits and potential problems associated with franchising a business.

Benefit: Expansion and Growth

• Perhaps the main benefit of franchising a business is the growth potential. The business can grow quickly with lower capital requirements. The franchisees are typically responsible for rent, construction costs and other expenses necessary to open a business. The company benefits from new stores without the associated costs.

Licensing Vs. Franchising

There are two type of business you can choose either franchising or licensing but both of it mostly are similar in term of royalty and fees.  Choosing between franchising and licensing depends on the type of business, available start-up capital and the amount of creative control desired by a business owner. Also, how close a relationship an owner wants with a parent company should be considered.