Direct franchising business model: its pros and cons
Direct franchising carries with it the following advantages:
• The franchisor is able to exert substantial control over franchisees such that there is a direct contractual link established between him / her and the franchisee. • There is no legislation on franchising in the UK, unlike in other countries wherein certain restrictions are imposed on the franchise business wherein if the franchisor is a foreigner, he or she too will be required to comply with the regulations. • Direct franchising is the most profitable form of franchising amongst others, as in this type of franchising; the franchisor need not have to share the profits with the intermediaries.
Along with the benefits, direct franchising also carries certain drawbacks:
• In franchising, the franchisor provides proper consultation, assistance and backup support. However, in cases when the franchisor is located elsewhere, this would not be possible. • The franchisor may not be well equipped with information and knowledge about the host country. • Whilst enforcing strict adherence to the franchise agreement, there might occur some difficulties in case the franchisor is a resident of another country and thus, would not be able to exert control on a regular basis.