A company like GWC USA should only be a chain store and never become a franchise due to the products that they sell and manufacture which include different kinds of valves for heavy machinery. Franchising involves a contract-based business arrangement between a manufacturer or other supplier and a dealer to produce and market the supplier’s good or service. The reason why many entrepreneurs choose to do a franchise instead is because running your own business is extremely risky franchising actually reduces the amount of time and effort required to start a business. The franchisor has already developed and tested the concept and the brand is recognized therefore many customers are already familiar with the business.
The franchising sector involves franchising agreements that exist between franchisee and franchisor and franchising overseas is a growing trend. The franchisor and franchisee are the key parties in a franchise agreement. The franchisor provides building plans, site selection, managerial and accounting systems and other services to assist the franchisee. Start-up costs can range depending on the type of business you are opening and the brand image associated with it.
There are many benefits and problems of franchising since there are good and bad franchise opportunities and overall the benefits and problems with operating a franchise can range. There are equal advantages to running a franchise such as prior performance record, proven business model, savings through volume purchases, tested management program, and the recognizable company name and the brand. There are also several disadvantages to running a franchise since the franchise frees can be very costly, there are always future royalties payments, you are linked to a reputation and a management that you must maintain or better and follow, tight control and not much room for expansion and there are many franchise agreement restrictions that you need to follow. Business owners need to understand all of these advantages and disadvantages in order to know if franchising is the right way to go.