Franchising is a safe and easy way for people to start a new business Essay 2022

Franchising is a safe and easy
way for people to start a new
business
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1
Introduction
The essay will help in analyzing the advantages of using franchising while opening a new
business. Franchising is regarded as a form of business through which the owner of a method,
service or product acquires the distribution via affiliated dealers. Therefore, the paper will
discuss the benefits of franchising which is an easy and safe way to open a new business.
Benefits of franchising to start a new business
Franchising is determined to be an alternative form of capital acquisition that offers various
advantages while starting a new business. In today's context, most of the entrepreneurs turn to
the franchise as it helps them to start their own business without the risk of the cost of equity or
debt1. Franchisee serves all the capital needs to operate and open a unit, which enables an
entrepreneur to grow by utilizing the resources of others. There is an advantage as the franchisee
gets an opportunity to start a business under the banner of an already established business. The
operating technique, brand and ideas are already tested and tried and is ready to be applied again
within a new location. Before opening a business, a franchisee commits and signs the lease along
with different contracts, which allows the person to expand without any contingent liability. The
risk is limited to the capital that is invested in opening a franchisee firm. In other words, the
amount is less than the amount of developing an additional company-owned location2. The
significant benefit of becoming a franchisee is that business will possess an established service or
product. Whether it is on the international or local level, franchisee provides various benefits
before and after an investment is done. Familiarity also helps an entrepreneur to develop a
consumer base due to the potential patrons with the help of pre-existing knowledge regarding the
brand.
1 "Startupsmart — The Latest News On Australia's Startup Ecosystem". 2019.
Smartcompany. Accessed September 27 2019.
https://www.smartcompany.com.au/startupsmart/
2 Marta Ziółkowska. "Success Factors and Benefits of Social Franchising as a Form of
Entrepreneurship." Studia i Materiały 1/2017 (23) (2017): 37-47.