Franchise advantages

Franchising can benefit both sides of the arrangement: the franchisee, the person or business that pays for permission to use the brand name and sell its products, and the franchisor, the business that owns the brand and grants that permission.

Benefits for the franchisee

Trading under an established brand means customers already recognise the name, so you do not have to build brand recognition from scratch. A proven business model — products, prices and routines already tested — reduces the chance of costly mistakes, so there is less risk of failure than starting alone. It lowers risk; it does not guarantee success.

Training and ongoing support teach you how to run the outlet, and help with supplies means reliable stock is arranged for you. National marketing and advertising across the network raises awareness in your area too. Some agreements give an exclusive area, so no other franchisee of the same brand can open nearby and take your customers. Banks and other lenders are often more willing to provide finance because the brand and model look lower risk.

For example, Priya buys a garden maintenance franchise. She gets two weeks' training, a set of seasonal service packages that she knows will sell, and the brand's spring advertising campaign. Her bank lends more than it would for an unknown start-up because the model is proven.

Benefits for the franchisor

The franchisor can expand with less of its own capital, because franchisees pay for their own premises, equipment and staff. Much of the financial risk passes to franchisees. In return, the franchisor receives an initial fee plus ongoing payments, often a share of sales. Each outlet also has a motivated owner-manager who keeps costs down and service high, because their own income depends on the outlet doing well.