ADVANTAGES

• Begin business with franchising, acquire start-up funds is much easier. However, to expand the network, the supplemental capital investment will usually be provided by the franchisees.
• With the investment from the franchisees, the business outlets will not only be established on a relatively short time but the trademark or the brand name can also be enhanced.
• The franchisor and the rapid expansion of the franchise network will only work in the favor of the business.Consumer will recognize and easily understand the service of the product and create recognition as well as the value of that particular trademark.
• Franchising also offer the franchisee exclusivity within a particular area and the franchisee has a direct and continuing financial interest in the business as opposed to the employed managers.

DISADVANTAGES

• Only limited to that one particular product or service that is controlled by the franchisor.
• Franchisees may find that they are loosing their individual management freedom as they are operating the business under   the franchisor’s business format, share trade identity as well as the management system.
• Franchisor’s revenue is based on the gross sales of franchisees.
• The franchisees have to pay an upfront fee as well as ongoing royalty to the franchisor for the grant of the franchise (cost of the franchisor’s research and development, pre-opening assistance and research.