Advantages and Disadvantages of Franchising

Entry
Mode
Franchise

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Advantage and disadvantage of franchise as an entry method...................................................1
Benefits of Franchise as an entry mode......................................................................................2
CONCLUSION................................................................................................................................2

INTRODUCTION
In today's context franchise is a form of licensing arrangement where a party license
another to use its business process or trade mark(Keup and Keup, 2012).In this report
organisation chosen is Hedonism Wines, a new fine wine and spirits boutique in London.
Herein, they are planning to adopt franchise as an entry method to enter into different markets.
Moreover, determining advantage and disadvantage and its benefits of choosing entry methods.
MAIN BODY
Hedonism Wine is a fine wine and spirits boutique which has already has become most
talked about wine projects of recent times(Hockett and Omarova, 2016). It believes that their
many thing one should should enjoy life with the word “Hedonism” which is frequently used in
tasting notes of wines. Herein, the have adopted new entry mode to enter into different market
that is Africa and United Kingdom with help of Franchise.
Advantage and disadvantage of franchise as an entry method
In a franchise business, a franchisor provides or develop various ways of doing business
in return of periodically payment of fees or purchases. Herein, their some of the advantages and
disadvantage which are determined below:
Advantages:
Marketing support: It is one of the best method of expanding business as well as
effective marketing plan which usually helps in eliminating cost while starting an independent
business.
Cost effective Expansion: Franchisee handle the research and finding outlets for chains
as an individual do not have to expand their own capital or additional funding in order to invesat
or grow business.
Disadvantage:
Capital Investment: Establishing a franchise is not an easy task it requires investment of
time and money in business development, legal documentation, marketing and packaging plans
etc.. Thhus, it become difficult for an investor to perform all actives in short period of time.
Costly legal action: While expanding business through franchise an business or an
individual have to deal with various legal action and documentation that usually higher of cost.
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Moreover, they are regulated by state federal laws requiring development of Franchise
Disclosure and other regulatory documentation.
Thus, the above mention are some of the advantage and disadvantage of franchise that are
adopted by Hedonism Wine in developing their business at competitive marketplace.
Benefits of Franchise as an entry mode
 Franchising provides benefits to both buyer and seller the primary benefit is ability to use
another investor money in order to expand their business or band name through out
investor or lenders.
 Moreover, franchise benefits include higher chances of success in sole proprietorship,
shot time of opening, initial training and ongoing support, selling power of known brand
etc..
 Thus, fees and royalties are used to found of operation in order to make marketing,
improving brand image, quality of goods and services in order to build their brand in
marketplace.
CONCLUSION
From the above discussion it has been concluded that franchise can be said one of the
best entry mode in developing or expanding business at different countries and cities. Thus, it
will create beneficial for an respective organisation to attain large number of market share in
competitive marketplace.
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REFRENCES
Books & Journals
Keup, E.J. and Keup, P.E., 2012. Franchise bible: How to buy a franchise or franchise your own
business. Entrepreneur Media.
Hockett, R.C. and Omarova, S.T., 2016. The finance franchise. Cornell L. Rev., 102, p.1143.
Hoy, F., Stanworth, J. and Purdy, D., 2017. An entrepreneurial slant to franchise research. The
Blackwell handbook of entrepreneurship, pp.408-432.
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