Franchising may be a good business model if/when done correctly. Very strict rules apply when you operate a franchise since operations have to stick to or comply with a certain business model, (e.g.) you cannot buy a BP franchise and want to paint your station yellow. This may sound obvious but there are a lot of business people who currently want out of franchises because they did not exactly and fully understand the business model. How a franchise model works is based on taking advantage of economies of scales (e.g.) bulk buying of anything attracts discounts which sometimes get passed onto consumers and of course, the risk of a good franchise failing is lower than the risk of a start up but there is more entrepreneurial creativity in a start up than there is in a franchise.
A franchise operation does attract certain royalties to the franchisor (i.e.) the original founder. In essence what you pay for is tried and tested business processes, systems and procedures which in a way is comforting to some people. It saves you the trouble of market researching your product or service. However, like any other business, if the franchise is good/has a reputation (e.g.) Nandos and is well placed (i.e.) at a place where there is a need and there is buying power then it can work wonders, it can have very rich prospects. The fact that it is Nandos alone is not good enough, there has to be traffic with buying power and that you can get through correct positioning.
Of key importance is to understand your relationship with the franchisor and expectations from both parties before buying or signing a contract.
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