The advantages and disadvantages of franchise business essay. Advantages and disadvantages of airline mergers zachary mindel. Some franchisors exert a degree of control that you, as a supposedly independent business owner, may find excruciating. Running your own business is a cornerstone of the american dream. There are advantages and disadvantages of buying a franchise. The disadvantages of a merger typically include the loss of jobs for workers and choice for customers, and the advantages are increased diversity and market penetration. Pdf this report is an attempt to compare the advantages and disadvantages of franchising which is one of the most known business model. What are the disadvantages and advantages of a merger. Will the merger gain higher public interests, or is the merger only beneficial for the shareholders and the executives of the company. You own your individual operation whilst having the benefit of a recognised brand name and the associated goods andor services.
If youre considering buying into a franchise, knowing the advantages as well as disadvantages can help you best decide if. Advantages and disadvantages of business franchising. It has to follow all the rules and regulations as per the agreement. A franchisor or the parent company places several restrictions in the way of a new franchise.
Both advantages and disadvantages are interesting to follow up. But here are some of the possible advantages and disadvantages of owning a franchise business. Obtaining quality staff or additional skills, knowledge of your industry or sector and other business intelligence. This allows one to leverage on the advantages of being a franchisee whilst overcoming some of the disadvantages associated with it citation hun11 l 1033 hunter, 2011. However, in taking a decision to contract with the franchise network, in addition to understanding the forms of doing business, the advantages of the system, you should also take into account that the franchise system is associated with some risks. Merging two companies can provide the firms with synergies and economies of scale that can lead to greater efficiency and profitability, but it is important to note that mergers can have a downside too.
This would be long, and we can talk over this in if at all you need a detailed explanation. During this period, the business may witness several ups and downs. Franchising offers business systems and productsservices which have been market tested and proved to work. The reason is that the firms simply agree to combine their entire operations. Owning a franchise can be a shortcut to success when youre starting a business, but there are franchising advantages and disadvantages to consider. What are the advantages and disadvantages of mergers and. Cost can be either a disadvantage or an advantage depending on location, industry and how the merger is handled. Quite often people are under the mistaken belief that the advantages outweigh the disadvantages, but this is because they are commonly blinded by the potential risks of starting a new business from scratch. Ive decided to list the disadvantages first, to in some way attempt to counterbalance my natural tendency to be an advocate for franchising, given my 25plus years. The franchise agreement usually includes restrictions on how you can run the business.
For example, you can put data from different months into separate tables, compress some of them with myisampack, and then create a merge table to use them. Thus, for example, there is no need to transfer title to individual assets of the acquired firm to the acquiring firm. Those with a unique business idea and the right amount of drive and capital tend to build their own company from the ground up, while others prefer to enter the business arena by buying into a well. A primary advantage is that a merger is legally simple and does not cost as much as other forms of acquisition. Under this, dealers were given the right to distribute goods for a manufacturer. The most obvious benefit is an increased market share or market power. What are the advantages and disadvantages of owning a franchise.
Nutsstonegetty images mergers and acquisitions may bring significant financial benefits if all goes well, but result in financial losses and a less productive workforce if they do not work as planned. Even longterm advantages may outweigh shortterm difficulties. Precisely, the advantages lie in improving capacity, market size and market and operating efficiency. What are the advantages and disadvantages for the franchisee. Outline disadvantages consumer company advantages consumer company. The mergers and acquisitions are a way which company can get more rights to control another company by buy shares and funds. Their way or the highway the main disadvantage of buying a franchise is that you must conform to the rules and guidelines of the franchisor. A read is counted each time someone views a publication summary such as the title, abstract, and list of authors, clicks on a figure, or views or downloads the fulltext. However, statistic data show that mergers and acquisitions often do. Benefits of expanding your business through an acquisition or merger. Franchising isnt a silver bullet for business expansion. This strategy can be opted by small businesses by having a brand name of a wellknown company associated with it.
Pdf determining pros and cons of franchising by using. As in other businesses, some airlines have to merge for pure survival and to avoid bankruptcy. This report is an attempt to compare the advantages and disadvantages of franchising which is one of the most known business model. The table below shows the advantages and disadvantages of franchising for the franchisee. What are the major advantages and disadvantages of mergers and acquisitions. First we will need to analyze whole the merger is going to benefit the most. The idea is to increase your revenues by acquiring a functioning company that will contribute to your income. When the two companies merge, they also combine the product base. While an acquisition can lead to some rapid growth for the company, it can also introduce some difficult issues along the way. Effects on customers and suppliers due to mergers and acquisitions. However, acquisitions can present some difficulties and actually put you at a disadvantage.
The advantages and disadvantages of franchi s ing this memorandum, produced for a number of our clients considering franchising, brings together a bullet point list of the advantages and disadvantages both business and legal of moving to a franchised system of operation. Before pursuing the acquisition of another company, it is important to consider the advantages and disadvantages the business deal will present. The primary advantages for most companies entering the realm of franchising are capital, speed of growth, motivated management, and risk reduction. Considered buying a franchise but unsure whether its the right direction for you.
Most franchisors encounter the following disadvantages. Weve narrowed down the questions youve been asking yourself to a few simple pros and cons. One of the major advantages of owning a franchise is that you dont have to make it from the bottom level. Franchising meaning, advantages, disadvantages it brings together the titleholder of recognized merchandise with another business.
Just as with any business model, there are disadvantages to setting up a franchise. The disadvantages of a business acquisition your business. Reverse mergers can be excellent opportunities for companies and investors, but there are still risks. Advantages and disadvantages of mergers and acquisitions. Disadvantages to the consumer reduction in competition firms competing for us. Even if you have the resources to buy a franchise and the business experience to operate one successfully, its important to consider all the advantages and disadvantages before you jump into the first opportunity you find.
What are the major advantages and disadvantages of mergers. Franchise fees and royalties can be a major expense. A franchise is the agreement or license between two legally independent parties which gives. These are 6 discussion quest is that needs responses to each question six in total. It may be harder for the combined organization to cooperate and communicate, and theres a risk that companies with a toolarge market share. Before you talk to the experts about franchising your business, consider these pros and cons. On the other hand, international specialisation and trade are promoted to an accelerated degree by this development. Mergers and acquisitions are the lifeline of any industry because there is no industry except some industries where the government itself has monopoly powers where mergers and acquisitions do not happen and that is the reason why it is important to know both advantages as well as disadvantages of mergers and acquisitions. These are brand recognition, low risk to failure, easy set up, ready customer portfolio and easy to find financial support. There are many advantages of growing your business through an acquisition or merger. This essay is discussing about the advantages and disadvantages of a small business owner in new zealand when they choose franchise as a business option. A successful franchise means that the business model is proven. Advantages allows for sharing of risk both financial and political provides opportunity to learn new environment provides opportunity to achieve synergy by combining strengths of partners may be the only way to enter market given barriers to entry disadvantages requires more investment share rewards and risks.
This is a mba level course so grammar and reference page needed. One way to grow your business is to buy other businesses. What are the advantages and disadvantages of franchising. Franchisees dont have to build the brand or set up the systems and processes to run the business efficiently. Access the pdf merger from any internetconnected desktop or mobile device and enjoy the benefits of fast and. Analyzing the consequences of mergers and acquisitions on. This free online tool allows to combine multiple pdf or image files into a single pdf document. A merger involves two firms combining to form one larger company. As well as the initial costs of buying the franchise, you pay continuing management service fees and you may have to agree to buy products from the franchisor. This report is an attempt to compare the advantages. Advantages and disadvantages of franchising essay example.
Apa format atleast one paragraph in length cite in paragraph wherever needed and no cover sheet needed. Following are, for example, the distinct advantages that franchising provides to the franchisee. Has it been possible for the companies to use this knowledge in the recent merger situation. Although the advantages were mostly stated objectives of the merger, the disadvantages were unintended consequences. Also there are lots of problems in mergers and acquisitions such as the element of risk and whether the mergers and.
What could be the possible advantages and disadvantages of. Disadvantages of franchising to franchisor and franchisee. What are the advantages and disadvantages of mergers and acquisitions. Mergers are an important corporate activity which company management undertake in order to scale, grow and achieve operational cost synergies or revenue synergies both of which potentially lead to increase in shareholder value owing to the new com. This is why evaluating the numerous pros and cons of mergers and acquisitions that are transaction specific is so important. The franchise agreement usually includes restrictions on how you can run the. In the market economic ages, the mergers and acquisitions between companies are very common. Hence, buying a franchise is so far safer than trying to start a business. Franchising like any other business model has its own disadvantages and limitations. There are some advantages and some disadvantages to using. Advantages and disadvantages of business franchising shoaibraza4 august 5, 2017 business 1 comment 3,460 views if you are looking for advantages and disadvantage of. Although the terms merger and acquisition are used very closely, but they are different. Generally, a franchise is an agreement for a specific period ranging between five and ten years.
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