Franchising, always read the smallprint first

A direct franchising business model definitely has several advantages. For example, the franchisor is in a position to exert significant control over franchisees. A direct contractual link is established between franchisor and the franchisee.

There is no stringent legislation on franchising in the UK, as is the case in many other countries wherein specific restrictions get imposed on the franchise business. Even if the franchisor happens to be a foreigner, the regulations need to be complied with. Direct franchising is definitely among the most profitable forms of franchising. In this type of franchising arrangement, the franchisor need not have to share the profits made with the intermediaries, thus boosting the margins.

Along with the advantages mentioned above, direct franchising also carries a few drawbacks. The franchisor may not be able to give consultation, active assistance and crucial backup support if the franchisor is located elsewhere. Also, the franchisor may not be familiar with the host country and its business environment. Some difficulties might occur while enforcing strict adherence to the franchise agreement, especially in case the franchisor happens to be a resident of another country and thus, would not be in a position to exert desired control on a regular basis.