Absolute

Franchise is the most advance form of retail business development. Retail selling itself is also a product of traditional or conventional trade development. It continues to grows becoming a multi ownership retail business called Franchise. There’s three important elements that form franchise.

1. System
2. Methods
3. Standard

A business is ready to go franchise if they have those three elements. I’m gonna wrote about those three elements on my later post. Now I’m going to give some benefit or advantage of developing franchise system for your business.

1. A maximum business expansion with minimum cost of expansion (you could expand your business anywhere you like without spending more money for capital. You’ll have partners for expanding your business, they’re called franchisee and you’re franchisor.)
2. A fast market acquisition with minimum cost compared with conventional business development (More franchisee you have, the more slices of market share your brand will have)
3. Ensuring future profit
   
4. Higher bargain position on vendors (A franchisor usually get the position that able to push vendors to lower their price for buying items in bulk)
5. Lower cost of research and development (Many informations you need to develop your business could be taken from your franchisee, so you wouldn’t have to get an experiment collecting data)
6. Good and healthy financial condition  (Franchise fee, royalty fee, training fee, etc, are streams of income you could have with franchising)
7. High quality assurance (A franchise agreement will help you maintain your standard of quality, whether it for services or goods, you could give your franchisee punishment if they’re not fulfilling your standard of quality)

Those are the advantage of getting franchise system for your business development. If there advantages there’s also disadvantages :

1. Lower ammount of profit compared to expanding your business on a conventional method (opening your own branch)
2. Higher cost of promotion (Everything about promotion will be franchisor’s responsible, create a winning brand and make your brand recognized by the market are not easy, and thus you have to spend more money on it)
3. High cost of franchise preparation
4. Franchisee issue (You’ll be dealing with person that maybe has the same qualification as you, or maybe better. And they are not your employee they have the same position as you, so you must have good communication and leadership skills in order to make your franchise business succeed)

Hope this post will come to be helpful, for further explanation about franchise you should read Brad Sugar’s book, think before decide something you don’t have to regret in the future. Don’t get things on a rush if you don’t want something like this happen.