Franchising and its types:
Franchising is a well-known term these days. People are gaining popularity by taking franchises of well-established brands.
The franchising process is of three types. These are:
Product Franchising – The first type of franchising is known as product franchising. This type of franchising is the oldest franchising form. A product franchising was a type of franchising, where the products and services are sold by some middleman on the behalf of the producer of those products. The middleman is supposed to pay something to access this facility of selling products of some other manufacturer.
Manufacturing Franchising – The second important type of franchising is manufacturing franchising. Manufacturing franchising is the process in which the producer gives some rights to the individual to produce the goods and sell those goods in a specified area on the behalf of the producer. For example, Coke and Pepsi are the commons types of manufacturing franchising.
Business-format Franchising – Business format franchising is the most common type of franchising used by people these days. In the business-format franchising, the business owner of the well-established brand gives many facilities to a particular individual that is interested in taking the access of his business. These services include marketing strategies, advertisements, etc.
Advantages of franchising:
There are a lot of advantages of franchising. But the main advantage is that the franchises are just like ready to start process as it uses a well-established brand of some franchisors. Therefore, it can be stated that it would be best to take a franchise than to start a fresh business.
The other advantage of the franchising is that the probability to fail is much less. As the business and its goodwill has already been built by the franchisor.
Disadvantages of franchising:
Restriction â€“ The franchisees are prone to a lot of restrictions. These restrictions are imposed by the franchisors in context of location of the franchisee, etc.
Right to sell the business â€“ Without the confirmation of the owner of a brand of a particular business, the franchises cannot be sold to anyone. This cannot even get transferred to the inheritor after his death.
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