Franchising is one of the best ways to start a business, but before one decides to buy a franchise, one must do their due diligence.

It is a unique way to structure a business relationship. One can follow this business model when one finds the idea of owning the business challenges.

What is Franchise Business? 

A franchise is a type of business where the individual or an entity known as a franchisee owns the business under the brand trademark and business model owned by another company, the franchiser. 

It means the franchisee will run the business by using the existing brand name and the business model of the franchiser for a specific term.

Some of the well-known Franchise in India are Momo Street, Belgian Waffles, Shoe Factory & more.

How does a Franchise Business work?

Both franchisee and franchisor enter an agreement with each other. They have a legal and a commercial relationship. 

The franchisee will use the franchiser’s trademark and brand name in the franchise business and sell the product and services. At the same time, the franchisee will pay the franchise fee and sign the agreement with the franchiser. After all the legalities are complete, a franchisee can open a new branch franchise or business.

The relationship between a franchisor and a franchisee is essential as it forms the base of the franchise business. The franchiser will allow the franchise to use their business name service trademark method techniques for an agreed fee. 

It will help the franchiser expand its brand name for many people, and a franchise can run a business at a low cost.

Benefits of Franchise Business

There are several franchise business benefits, some of which are mentioned here.

Quick expansion

Today’s scalability plays a crucial role, and you can quickly capture the market share by taking the franchise business. In typical models, the promoters must wait much time and invest a lot of money in the franchise model. 

The franchisee will provide the capital, and the franchiser will provide the brand and technical strategies to quickly expand the business with minimum requirements. 

Minimum operating cost

One of the significant benefits of running a franchise business is that the operating cost is minimum. The franchiser will negotiate volume pricing and group buying on the franchisee’s behalf. This will minimize the operating cost, and as the franchise is aware of the local market conditions, the franchiser can save on all the expensive research about the local market.

Branding

It is the responsibility of the franchiser to put their best foot forward in promoting the brand name; hence the franchise business is advertised and branded as compared to the typical company.

Additionally, in the case of the franchise business, advertising or branding cost is shared by all the franchises. Overall branding expenses are minimum for the franchisee. 

Quick access to capitals capital

As the franchise business model is well established and has a proven reputation, it is easy for the franchise to get a bank loan to start a franchise business.

Training and technical knowledge

In the franchise business, the franchisor will provide all the training to the franchisee. So, there is a minimum chance of costly mistakes due to the lack of exercise.

One of the Fastest growing franchise businesses in India, which is growing very fast, is Pharma Franchise. You will find all these amazing benefits with the Best Pharma Franchise Opportunities.

Drawbacks of Franchise Business

Franchisee is dependent

In the franchise business, even though the franchisee is the business owner, they cannot work independently. The franchiser will regulate the franchise business, and the franchisee also must report to the franchiser.

Lock in term

Ideally, the franchise needs to commit to the franchiser for a lock-in term until they are expected to operate the business compulsorily. During the lock-in term, the franchisee cannot change any business terms.

Negative publicity

If the franchise business gets negative publicity because of the actions of the franchiser or the franchisee, the entire brand will suffer. It can lead to a loss of sales for the franchise.

It is good to buy a franchise if one wants to build their skills. At the same time, if one wants to have control of their business, it would be great to start their own business.