Franchising facilitates a franchisor to raise the profitability of smaller units

If the franchisee benefits from national advertising undertaken by the franchisor for the franchisee himself, the franchising business also proves advantageous to a franchisor in several ways.

For example, through franchising, a franchisor can secure a greater and quicker distribution of his products or service. Secondly, availability of franchisees’ capital makes it easier for the franchisor to expand his network in a quicker way, which would have been a little difficult in the case of arranging for funds on his own.

Franchising facilitates a franchisor to raise the profitability of smaller units because of increased purchasing power and low overhead costs. The concept of Direct Franchising is mostly found in the UK and is only possible in the following cases:

1.    A small number of franchisees is to be recruited 2.    The franchise is simple and easy in terms of training the franchisees wherein no constant assistance is required. 3.    The home country and the host country (target country) are similar in terms of culture and geography.

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