Hello, however, in all businesses, we define what kind of activity, and what kind of activity the consumer is doing for profit and loss. So to know the definition, we have to move forward.
Table of Contents
Advantages to the consumer
In theory, a consumer should benefit greatly from a franchised business because he will be dealing with an owner and not merely an employee. The service should, therefore, be personalized, effective, and result in greater customer satisfaction.
As the purpose of a franchised network is to establish uniformity of image amongst all its franchisees, a consumer should be able to expect the same standard of goods or services in different parts of the country from members of the same network and be able to rely on after-sales services and promises.
In many franchised networks a franchisee will honor the commitments and obligations to a customer of another franchisee should he be required to service such customers, and if not the franchisor itself may step in to preserve the reputation of the brand. A consumer dealing with a small independent business would not have the same comfort where the business goes into liquidation.
Disadvantages to the consumer
A highly successful franchise can reduce or even eliminate the competition and choice for the consumer. This is particularly the case where a franchisee has an exclusive territory. Where a customer is dissatisfied with the service or product obtained from that particular franchise there will be no alternative outlet to go to. This can be a problem where the customer has a personal complaint against the franchisee.
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Summing up all of the Below
Benefits of franchisor
- Cost-effective growth
- The commitment
- Participation reduced
- Cooperative advertising
- Collective bargaining
Disadvantages of franchisor
- Loss of ownership
- Management and personnel skills
- Loss of flexibility
- Risk mitigation
- economies of scale
- Efficient management
- Increased advertising
- Better financing
- Reliance on Reputation
- Product restrictions
- Restricted right to sell
Also read: What is business analytics?
However, there is no doubt that a well-structured and managed franchised operation can benefit all concerned. This provides an opportunity for small businesses to compete with larger players and even on the international stage.
The continued growth of the franchise is a testament to the success and profit it can bring to franchisors, franchisees, and consumers alike.
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