Packagehp.com – Definition, Functions and Examples of Franchise (Franchise) – On this occasion the admin discusses about franchising. The advantages and disadvantages of franchising along with examples of franchise businesses. Here below is the explanation.
Definition of Franchise
Franchise or also known as Franchise is a special right owned by an individual (individual) or a business entity to a business system, in an effort to market goods or services that have been successful and proven and can be utilized or used by other parties through a franchise agreement.
Understanding According to Experts
There are also definitions according to experts, including:
1. According to David J. Queen
franchise is a method of marketing and business expansion. The franchisee who pays for a business benefits from consumer awareness of the trademark, proven system and other services provided by the franchisor.
2. According to Charles L. Vauhn
franchise is a form of marketing and distribution activity in which there is a company that grants the right/privilege to explain a particular business in a certain time and place to an individual or a relatively smaller company.
3. According to Winarto
franchise namely a partnership relationship whose business is strong and successful with entrepreneurs who are relatively new in a business that is relatively new in the business, which aims to be mutually beneficial in the field of providing services and products to consumers.
Advantages and Disadvantages
A business or business certainly has several advantages and disadvantages, here are some advantages and disadvantages of franchising (Franchise):
Profit:
1. Business Management Has Awaken
Franchising provides an advantage for doing business under the banner of another business that already has a good reputation.
The naming and management of the franchise business has been tested so that it is ready to be implemented in a new location.
2. Already Known to the Community
Because the franchise business was previously known to the public, marketing this franchise business tends to be easier.
This means that building a business reputation costs less and less effort than building a new business.
3. Business Cooperation Has Been Built
For franchise business buyers will benefit from the cooperation that has been built previously by the franchise owner. For example, cooperation with suppliers of raw materials, marketing and advertising.
4. Easier Financial Management
The financial system has been established by the main owner of the franchise, so that franchisees do not have to bother to think about financial management.
5. Stronger Support and Security
The franchisor will provide training such as financial management, advertising, marketing and others. This is included in the franchise purchase package.
Deficiency :
1. Bonded with Supplier
Looking for a cheap supplier is certainly useful to reduce the capital spent. But with this franchise system, we cannot choose suppliers freely because it has been determined by the franchise owner.
2. Lack of Control
Since all systems have been defined by the franchisor, the franchisee does not have sufficient control over his business. So they cannot be creative with ideas for business development.
3. Profit Cutting
The franchisee must pay royalties based on the amount of profit earned. If the profit earned is small, then the profit will be deducted to cover this cost.
4. Franchise Fee
The franchisor will usually apply for the first fee to pay for the franchise agreement. Further costs are continued for support and training for franchisees.
5. Reliance on Other Franchise Reputations
This is one of the biggest drawbacks of a franchise business, namely the dependence of the franchise’s reputation on other franchises.
This means that if other franchisees make mistakes that result in damage to their reputation, it will also have an impact on the franchises that we manage.
Examples of Franchise (Franchise)
In Indonesia, there are several franchise businesses that have been proven to have developed their businesses to have several branches spread out. Here are some examples of original franchises from Indonesia:
- Jco Donuts
- California Fried Chicken (CFC)
- Alfamart
- Indomart
- Baba Rafi’s Kebabs
- Village Seasoning
- Mas Mono Grilled Chicken
- Wong Solo Grilled Chicken
- Ice Shell 212
- Es Teler 77
Thus the discussion about what is a franchise (Franchise)? the advantages and disadvantages of franchising along with examples of franchising. Hopefully useful for all of you.
