Franchising Business - Essay Example

It acts as a good source of income for the franchisor. It occurs through the regular payment of royalty fees, franchise fees, levies and funds from private labeling of products. Such funds form the capital backbone of the firm, hence an assured turnover of investments and profits. There is also a decrease in the operational, distribution and advertising costs. There is a surge in the money used for finance and development issues2.In addition to that, there is a massive reduction in the operational costs as one can simply have a small organization as compared to the absolute ownership of operational locations.

There is a great uniformity of the work and services rendered a degree of consistency and an increase in productivity hence. There is a control system to facilitate and measure up the quality of services, otherwise known as quality assurance unit. Customer care and public relations are excellent leading to an increase in the overall sales.Furthermore, it ensures that the products are located in strategic places where consumers can easily access them. It increases the number of selling points through utilization of other people’s businesses.

There is a faster expansion with an overall effect of reduced effect of competitors.From the utilization of the franchising system, the performance of a firm that has utilized the model in marketing the products is useful and better than the one having various branches. It is because people who have the motivation and the urge to increase the sales and the overall profits do the operations. It remains difficult to motivate managers to such extents.