Franchising or more familiar with a franchise is a business to expand and distribute goods or services by buying a trade license. Simply put, the franchisor pays the initial and royalty fees that have been determined to the franchise owner. After paying, the franchisee has the right to use trademarks, logos, franchise business systems and the right to sell franchise products. Some franchises also provide other benefits, such as training franchisees before starting to trade.
This franchise concept can be a good and promising business opportunity for business people who want to make a business, but do not want to start the business from scratch. However, before starting a franchise business, it helps you pay attention to the advantages and disadvantages!
Advantages of Franchising Business
1. Faster Process Because Business Management Has Been Established
Compared to opening a business from scratch, a franchise business will shorten your time to start a business. Business ideas, brands, and systems that have been formed before. So, the franchise just has to run it without having to worry about thinking about business preparation from the start.
2. Training & Guides from Franchise Owners
Generally, franchise owners will provide training to franchisees before they sell their products or services. In addition, franchise owners will also provide guidance and recommendations on various kinds of things to franchise holders. Everything is done to maintain the business reputation to run according to predetermined standards and make it easier for franchisees to run their business.
3. The Brand Is Known
The most tempting of the franchise business is from the brand or brand side. Perhaps the main purpose of franchisees is that the brands they sell are well known to the public. Promotions carried out will be much easier because the brand already has its own “name” and market. It took a long time for entrepreneurs who built their business from 0, built their brand and reputation in the eyes of the community. With a franchise, indirectly, you already have your own customers.
4. Relatively cheap costs
By opening a franchise business, you don’t have to worry about thinking about how to market your business, because franchise owners have prepared their own strategies to market the business. In addition, franchise prices are generally quite cheap for small-scale businesses, for example drinks or contemporary snacks that only use booths to sell their wares. Usually, the franchise price offered ranges from 3 million to a million depending on the package you take. As for the restaurant franchise, minimarkets, and so on, it is certainly priced at tens, hundreds of millions to billions of rupiah. However, the high price has a high chance to get greater profits because the brand is already very familiar in the community and has its own fixed consumers.
Although it sounds tempting, all businesses certainly have their own risks and disadvantages and advantages. Come on, try to find out about the shortcomings of a franchise business before starting it!
Lack of Franchise Business
1. Raw Materials Rely on Franchise Owners
When choosing to open a business, you certainly need to find a supplier for the goods or services you want to market. Of course, at an affordable price and good quality. However, if you run a franchise business, you must use a supplier that has been determined by the franchisor. The agreement is also difficult to change, or even cannot be changed because it is usually written in the contract from the beginning.
2. Limited Innovation
When you have a certain business, of course you want to make new innovations to attract more customers. If you have a personal business, you can easily do this. However, different things will happen when you run a franchise business. The franchisor has full control of the business he owns. So, you must follow all the terms and regulations that have been agreed upon from the start. The innovation that you want to apply to your business might be difficult to apply, because it requires approval from partner owners first.
3. Profit-Sharing System
At the beginning of choosing a franchise business, you certainly need to pay a predetermined amount of money to buy the franchise. Well, in addition to these costs, most franchisees implement a profit-sharing system or profit-sharing in the form of royalties from profits that partners get.
4. Very influential business reputation
The last is a business reputation. To be easier to understand, assume in a way like this: During the run, a business certainly has risks and problems that will be faced. When there are problems that occur with other franchise partners, businesses owned by other partners will also be affected because they use the same business and product names. This is very risky. If this happens, it can cause a decrease in franchise income.
That’s the shortcomings and advantages of the franchise business, Business success depends on how you run it. If you prefer to run a personal business, then you have the advantage of the power and full control to run your business. However, you need to start everything from scratch and build it with greater effort. However, if you choose a franchise business, then you can consider the advantages and disadvantages of the points mentioned above.
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