Franchising

• Advantages:

  • Products, equipment, premises design and marketing are usually established
  • Franchisor often offers training
  • Less need for the franchisee to have previous business experience
  • Investment risk may be lower
  • Immediate benefit from the franchisor's good will.
• Disadvantages:

  • Franchisor controls over price, suppliers and health regulations
  • Profits must be shared with the franchisor
  • Service fee charged for advice from franchisor
  • Contacts may be biased to franchisor
  • Franchisee may feel like an employee but without benefits and security
  • Franchisee deals with any day-to-day operations and are legally accountable.