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Franchising




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Whether you are looking for someone to repair your car's windscreen, to clean your office or to unblock your drains, the chances are that it will be a franchisee who offers the service you - and if you want to pop out for a snack in the High Street while the job is being done, you are more than likely to find yourself a customer at a franchised fast-food
A franchise is simply a licence which gives a local businessman the to sell the goods of a large parent company, and to use its trade name. It may also give him the right to manufacture and distribute the goods in a certain area. In return for the franchise, the operator (franchisee) usually hands over a sum and agrees to pay which are normally based on a percentage of his or her future sales.
This type of business originated in the USA, where currently about one-third of all sales and approximately 3% of the gross product (GDP) are through franchised outlets.
Nowadays, franchising is a growth industry in many other countries, too. China produces and bottles Coca Cola under a franchise agreement with the American Company, and whether in Munich, Manchester or Tokyo, you won't have to look far to find the ubiquitous McDonald's hamburgers. In the United Kingdom alone franchise sales in excess of 2 billion are forecast for the near future and, thanks to franchises, already more than 60,000 people have been offered an alternative to being on the .
What then are the advantages and disadvantages of franchising? For the entrepreneur who wants to work for himself but is afraid of accepting all the risks of going it alone, a franchise offers the chance of setting up a business with a minimum of experience and capital. Many franchisors supply an operating which explains every aspect of how the business is to be run. They offer training courses for and there are instructions about the design of , which suppliers to buy from, what prices to charge and even about the number and dress of the employees. Moreover, the product is usually a name backed up by a nationwide advertising .
For the franchisor, the advantages are . He is able to expand his business with a minimum of additional investment, and he knows that the people selling his products will be highly motivated because they are working for their own . In general then franchising may be viewed as a safe way into business. However, there are still risks involved. In the past, a number of blue franchisors, for example the Atlanta Bread Company or the Blockbuster video rental franchise in the USA, have and franchising is still not completely free of the associations with the selling techniques which were part and of its early development.