Risk involved in franchise business is lower compared to a proprietary business

Franchising is a well established business model all over the world. In simple terms, franchising refers to the process of setting up of a new branch of any well known company or brand.

As a franchisee, you usually need to pay a certain amount of fees for using and leveraging the identity and brand name of the parent company. In a majority of cases, all the orientation, training, technology and advertising support, promotional ideas, etc. are provided by the franchisor. You just have to be eager to learn tricks of the trade and focus on execution.

To start a new business can be very expensive, risky and tedious. You have to start from scratch. To start from scratch is recommended only if your business has something innovative or unique to offer. Also, the market sentiments do matter. You need to be lucky enough in being able to time the market well. Luck is indeed a big factor! You need a lot of time, effort and patience for all this and still you cannot be absolutely, one hundred per cent sure about its success.

This is not so much the case with a franchise. The risk involved in franchise business is much lower compared to an individual business because the business model has already been proven as successful.