Identify one franchise opportunity that you would consider, and answer the following questions: 1. What attracts you to the idea of franchising? 2. Are opportunities in franchising comparable to starting a business from scratch? What are the pros and cons? 3. What are the long-term prospects for owning the franchise you researched? Can you make an equivalent amount of net income compared to starting your own business?
A company engaged in business is defined as one that offers products and services to the public in return for cash with the intention of becoming profitable. They concentrate on creating goods or services to sell, turning a profit, and filling a specific societal need.
Answer and Explanation:
1. The idea of Franchising:
1) A readymade proved business system: Franchising has benefits over alternative business ownership models, primarily because the tried-and-true business models offer a readymade opportunity.
2) Name recognization: When a person opens a franchise, his company will already be known to customers. When a brand name is immediately recognizable, a business owner has a foundation of customers that can expand from the beginning.
3) Lower startup cost: It can be very expensive to launch a new firm from scratch. That won't be a problem if someone has money in the bank or access to large loans. There are often lower upfront costs when purchasing a business franchise. Franchises are generally cost-effective investments, but not all of them are cheap.
2. The opportunities in Franchising admire beginning a business from scratch:
Buying a franchise is usually preferable to opening a brand-new startup firm. Compared to the founders of a new company, franchise owners have a higher chance of succeeding as businessmen. Starting a new business from the beginning can be very challenging. On the other hand, franchises follow a predetermined business plan that has been successful in the past. So, Franchises outperform startups in terms of overall success.
Some pros of Franchising are :
1) Business assistance: The franchisee receives financial assistance from the franchisor as one of the perks of Franchising. Depending on the franchise agreement's terms and the business's organization, the franchisee can receive a readymade business operation.
2) Lower failure rate: Franchises generally fail less frequently than new businesses. When a franchisor invests in a franchise, they become a part of an established brand and a network that will provide them with support and guidance, decreasing the likelihood that they would fail.
3) lower risk: A business startup entails risk. This is accurate regardless of whether a business owner buys a brand or starts their own independent business. However, franchises have a lower risk because of their franchise network.
Some cons of startup business:
1) Risk: The risk of failure is substantial because most companies fail during the first year of business. A startup's strategic vision may be distorted by operating under such high risk. As a result, they either miss out on market potentialities or overshoot their sales forecasts.
2) Funding: Despite the cheap initial investment, the venture's founders make significant and responsible investments. A startup company may frequently fail due to a lack of proper finance.
3) Lack of experience: The only way to survive in a startup business is through practical experience. It takes a lot of effort and experience to manage and lead a group of young professionals at a startup. Many young people jump into a startup company without doing their research or having enough knowledge, which leads to failure.
3. The long-term prospect of the franchise is that it provides more exclusive benefits and opportunities to explore, and it is a fantastic long-term investment. The franchise must be a close fit with their values, interests, and passions if someone wants to realize the full potential of Franchising.
They make an equivalent net income compared to starting their own business:
No, franchise and startup business does not have equivalent net income because of their risk. A new startup has more risk than a franchise. If the startup business succeeds, it will have a greater net income. Hence, these two business incomes cannot give equivalent income.
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fromChapter 6 / Lesson 3
Learn to define "type of business" and study examples. Explore the three major types of business organization: sole proprietorship, partnership, and corporation.