Franchising is a business system which independent businessmen or companies called “franchisees” get the license to distribute the products of a company (franchisor) under the name of that brand and it is a very popular method in today’s business world. This business method is very useful because of the benefits that it creates both for the franchisor and the franchisee such as providing opportunities for franchisor to easily expand in the market, reducing the risk of failing (for the franchisee) and creating a more convenient atmosphere to develop new products.
First of all, for franchisors, franchising provides the opportunity of reaching many areas economically, without making investments to open another office in those areas. A company which has a trusted and reputed brand name can easily spread its operations in international area by selling license to national companies, so it can enter the regional market via that company. For instance, Burger King International, which has restaurants in 61 countries, has its master franchisees in each country, so it extends its business by benefiting from the work force and experiences of the franchisees in their own traditional cultures. Moreover, franchising can also be used to enter local markets especially in rural areas of a country, which are far away from the headquarter. Tab Gıda, which is the Burger Kings’ master franchisee in Turkey, has also its own sub franchisees to serve in all regions of Turkey. To manage a restaurant in Diyarbakır, may have some difficulties for a company in Istanbul, however when a sub franchisee opens a restaurant in Diyarbakır, the master franchisee is only responsible of supporting and supervising that restaurant by getting 13% of income.

One another benefit of franchising is from the franchisee’s aspect that it reduces the risk of failing. While a person entering in the business world, the risk of failing in first try is very high because of not having enough experience to deal with probable problems. However, being under the guarantee of a reputed brand name, minimizes the risk of failing. Furthermore, managing of the business gets easier under the control of a franchisor. For example, according to the license agreement Tab Gıda is responsible of training of the staff and restaurant directors during the period of agreement which is twenty year and it also provides technical support when an operational problem is occurred.
Finally franchisor and franchisee co-operation creates a convenient atmosphere for making new inventions or developing new products. In companies which have many franchisees world wide, the opportunity to find financial resources and original ideas for research and development is higher when compared with the companies which do not have any copartners. Many of the most popular menus of Burger King is developed by inspiring from traditional cultures according to the special tastes which are recommended by franchisees.
In conclusion, franchising is a widespread method of business which has many benefits both for the franchisor and franchisees. This method is also seems to be more and more popular in future because of its main concept: getting more profit with making less investment.

Registered Members, login
Join now, it's free

Property of EssaySwap.com