The Advantages And Disadvantages Of Franchise Business In Australia

Essay by PaperNerd ContributorUniversity, Master's October 2001

download word file, 5 pages 4.0

Franchising is an exciting business format and marketing method. When it is properly structured and well run it provides benefits and satisfaction for both franchiser and franchisee. It is said that there are 44,800 franchised outlets and 730 franchise systems in Australia --- more per head of population than any other country. According to the University of Southern Queensland survey, the franchise system turnover is currently $81.4 billion expanding by 17% compound growth per annum. Furthermore, franchising is 2.5 times more successful than non-franchised business in Australia and only 0.7% of franchisees in serious dispute with the franchiser. All the figures above show that there are many advantages of joining a franchise. The advantages can be summarised as a proven system and an established name, group purchasing power, no business experience needed for franchisees, access to training and assistance from the franchiser, and so on.

First of all, the franchisee has the right of using the franchiser¡¯s patents, trademarks, copyrights, trade secrets and any secret processes of formulae.

It actually reduces the franchisee¡¯s burdens of creating a business and less capital is needed. Furthermore, the franchisee¡¯s business benefits from operating under a name and reputation, which are well known by a large mass of people. It enhances the resale investment value for the franchisee. The proven system also helps the franchisee to run the business more easily so the franchisee¡¯s business risk is greatly reduced. Moreover, the franchisee is actually an independent businessperson operating in the franchise system. It is an opportunity for the franchisee to maximise his/her turnover.

The second advantage of joining a franchise is the franchiser¡¯s advertising and promotional activities. Advertising as a group is usual. Therefore, it is normal for the franchisee to make contribution to the expended funds. Furthermore, the bulk group purchasing power is...

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