Question

Buying a franchise o Why would a person choose to be franchisee over being a sole proprietor, partner or corporation? • Franchise room for • There are

Answer 1

Franchisee is a business model where in an individual is sold rights for doing an established business model in a different location. It runs exactly is a similar way as the business of the franchisors runs. It primarily deals with lending of the company logo, brand, polices, operating procedures. Now a days Franchisee business model has become popular. Widely known Franchisee business model are Burger King, Macdonald’s, Cafe Coffee Day, Starbucks, Dominos, and Pizza Hut etc.

A person would choose to be franchise over proprietor, partner or corporation due the following :-

- Advantage of having Franchisee is that the business model is already established. Risk for failure is low. The business model is tested and proven. A business is supported by multinational. However, this shall not be the case with proprietor, partner or corporation

- Advantage of having established brand that customers easily can recognize. On other side, a proprietor must develop his own brand and promote it through advertising and marketing leading to huge branding costs.

- A franchisor would pass on technology, advanced techniques to the Franchisee, which would enable him to kick starts it's business. However a proprietor must invest in technology, research and development leading to a huge costs.

- Franchisors help new franchisees to obtain and arrange finance. A proprietor must find his way out to obtain the funding for its business.

Thus looking at the above benefits a person can prefer Franchisee is a business model over proprietor, partner or corporation.