Franchising is typically done by Corporations

franchising is typically done by
franchising is typically done by

Franchising is typically done by – In this modern era, for those who already have business capital, it will be easy to develop their business because they have many business choices, for example, franchise business and this discussion is based on one of the questions from Business Structures namely “Franchising is typically done by” Let’s discuss below this:

Franchising is typically done by

C.Sole proprietors


D. Corporations


In this case, the business owner who can sell the franchise is a company that has been proven to have a business system that is tested and able to generate profits. This business owner is usually called the franchisor.

The franchisor then develops his business by selling his business franchise to a business partner or commonly called a franchise, the franchise is then allowed to open a business with the franchisor’s corporate identity and sell the same product, and as compensation to the franchisor, the franchisee must pay royalties.


Franchising is typically done by Corporations

Many people start a business and choose a franchise rather than building their own business from scratch without knowing the advantages and disadvantages. Indeed it is the right of each person, but it would be better if we know what the advantages and disadvantages of running a franchise business.

Advantages of Franchising

Here are the advantages of buying a franchise business compared to building your own business:

1.  Recognized Trademark

Becoming a franchise means that you can use the franchisor’s trademark. Building a trademark is not an easy thing, but the franchisor will prepare everything, so you will get convenience here

2. Product Popularity

The products you sell in the franchise business are already well known to the public so you don’t have to work hard to build the reputation and popularity of the products you sell.

3. Location Selections

The Location has a big role in determining the success of your business. Determining the location the business is not easy, failure to choose a location will have a significant adverse effect, the franchisor will also help you by analyzing the right location, for you to be able to run the franchise properly

4. Training

If you are a beginner in the business and do not have any business skills, a franchise business will make you feel safe. Franchisors will provide training to each franchise so you do not feel blind in running the business.

5. Businesses Tested

Before selling a franchise, a business must already have a business system that is tested first. Although there will still be a risk that the business might fail, you still don’t need to start a business strategy from scratch. This will greatly reduce your burden, especially for beginner entrepreneurs.

6. Joint Promotions

If the franchisor gives a promotion directive, each franchisee will do the same so that the promotion reach will be broader. Promotions carried out by other franchisee outlets will also have a positive impact on your outlet.

Disadvantages of Franchising

After knowing the advantages of franchising, you also need to know what the disadvantages are. Here is a shortage of franchises:

1. Glued to the Concept of the franchisor

Basically buying a franchise means being a branch of the franchisor’s business. This means that the franchisee must represent the franchisor company as a whole. the franchisor has made a rule that we shouldn’t violate it if you are a creative and innovative entrepreneur, franchising is not recommended for you.

2.  Expensive Royalty Fees

Royalties that must be paid by the franchise to the franchisor at the beginning of the business are not cheap, usually, you have to spend enough to get the business permit, if you don’t have much capital, it will be quite difficult to buy a franchise.

3. Reputation Bets

Being a franchise means that you are part of a broad partnership between you, the franchisor and other franchisees, in the eyes of the business community the three parties are the same, if there is one of those parties who made a mistake and tarnished the name of the trademark, you will be affected. Even if you do not make mistakes in business practices that you hold, the market may lose confidence in the products sold.

4. Limited Ownership

Each franchisee is bound by an agreement with the franchisor. In a franchise agreement, a franchise is not permitted to sell his franchise business to another party. If you feel that the franchise business is not profitable, you cannot transfer it to any party, once you decide to close the franchise business, the capital you spend to pay for the franchise royalty will expire.

5. Has Potential Conflict

Franchising is a business that relies heavily on cooperation agreements. Cooperation agreements are very sensitive and vulnerable to conflict. If there is an imbalance in business practices the potential for conflict between the franchisor and the franchise is very large. Not infrequently this conflict brings great losses to both the franchisor and the franchise.

6. Limited Suppliers

Supplier for each franchise has been determined by the franchisor. Usually, the franchisor is the supplier of all franchise businesses, you are not allowed to buy raw materials from other suppliers even though there are suppliers who offer more benefits.

Thank you for reading the article about Franchising is typically done by Corporations, hopefully, it can add to your insight.

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