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Franchising is a way of doing business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers (franchisee). This innovative way of business has become a popular model for businessmen from all the sectors to flourish their businesses all across the world.
The popularity of franchising business model in India can be seen by the fact that the franchised businesses have captured a market size of USD 7.2 billion with an annual growth rate of 30%.
For those who think franchising is a skeptical concept for them to adopt as a business model, we bring five facts that will clear all the doubts about franchising, and will help the business succeed regardless of the industry.
Lower Failure Rate
The first and foremost advantage of operating in a franchising model is that it has a lower failure rate. When one buys a franchise, they buy an established concept that has been successful. As per some recent reports, a franchise business is much more financially-rewarding than that of an independent business. Also, the chances of success are more in franchise business than in independent business that has 70-80% chances of not surviving in the market.
Easier Process of Getting started with Business
The reason as to why many aspiring entrepreneurs end up doubting their dream-business is that it is pretty tough to get started in the market. With so many other companies already present in the industry, the market competition becomes tough, thereby giving lower chances of sustaining in the market. In such a situation, franchising helps a lot.
With franchising, you get a lot of help starting the business and beyond. The franchisor provides everything that is required to build the business such as equipments, supplies, and instruction or training. In a franchise business, as a franchisee, you will reap the benefits of the parent company’s revenue without even actually investing much from your end.
The Face of the Brand
In an independent business, there are a lot of things that one considers when they start a fresh business. From preparing a business plan to deciding the target audience, you have to give time to each and every aspect of the business. You make strategies to attract customers and put on some extra efforts to bring them in your store.
While in a franchise business, you buy a franchise of an already renowned or established company. You will always have a benefit of associating with the brand. There will be in-built customers for your business as you will have the brand name. This is one of the fanciest benefits of buying a franchise.
Managerial Benefits
From a managerial point of view, a franchise business makes the managerial activities much easier. As a franchisor, the day to day management of the franchise is not just your headache, but it gets divided into the franchisees. In this way, the responsibilities will get divided and the management becomes much more streamlined.
