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Benefits of Franchising

To the franchiser. For the franchiser, franchising is beneficial as discussed below:

(i)    It allows the franchiser to expand the distribution system in the shortest possible time.

(ii)    The franchiser is able to expand the business with little extra cost since the franchiser provides the capital for the outlet. The franchisee also pays a lump sum to the franchiser.

(iii)    It enables the franchiser to increase his goodwill and reputation by expanding his network. The franchisee has a large financial stake in the business as he has invested huge amounts for the retail outlet and paid the license fee. This ensures the success of the business and popularity of the franchiser’s name.

(iv)    The franchiser gains wider acceptance of his brand name through the franchisee.

(v)    The franchiser gets feedback about the product popularity, and specific needs and preferences of the local customers from the franchisee.

To the Franchisee. The benefits of franchising to the franchisee are as follows:

(i)    The franchisee can use the name and trade mark of the franchiser for attracting customers and increase his sales.

(ii)    The franchisee can get advice and assistance of the franchiser in training his staff, store layout, publicity, etc.

(iii)    The franchiser ensures a high degree of quality control. This helps the franchisee to satisfy his customers by offering quality products.

(iv)    The franchiser makes huge investments in product innovation and research and development. The benefits of these investments are passed ont eh to the franchisee in the form of improved products.

(v)    The products are well advertised in various media and are known to the people. It is easier for the franchisee to promote the sale of such products.

(vi)    There are greater changes of success of the franchisee because the brand of the franchiser is well known in the market.

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