The idea behind buying a franchise is simple. It can be either an instant approach of making good money, with low investment, or lack of experience to venture into a new business of own. It isn’t discouraging though. With franchise method of business, buyer or the aspiring entrepreneur may assume an opening opportunity for a broader picture. For instance, after buying a franchise of a XYZ Company, the franchisee is liable to receive expert guidance of how to run a business. The advice from an expertise, which will be the franchisor in case of franchising, will come from the ground experiences. Not only it will give the franchisee an outlook of an industry, but also the techniques and modern methods to deal with anticipated struggles, and also training for entrepreneurship.
Seeing oneself as an established entrepreneur, it is conditioned to identify and work on every season in business development. So how to handle the crises will something the franchisee may learn at a low-risk level by opting franchising. Furthermore, the buyer does not have to spend extra amount on advertisements for its products or services. As the franchise agreement will entail with it the brand’s logo, slogan, existing customers, deals and benefits and marketing, and other advantages for the franchisee.
The mentioned facilities will obviously come with a cost that will be covered under the franchisee fees. The fee differs respectively with companies and industries. Also, the franchisor will expect from its franchisees to follow mandate of its brand, which can be any. And certain conditions in prospect towards brand’s name that are best discussed over agreement by both the parties, like royalty amount and logistics et al.
Well that was the situation when you do not hold a business; or experience in entrepreneurship. Or else, a running business of yours that is not competitive in the market. Another way of starting business at comparatively low investment is holding joint venture. It is compelling and has all independence that one seeks in a business ownership. However, it is making a blind move. New risks, uncertain growth, planning, finance calculations and field knowledge. In Joint Venture you are not buying the franchise, but connecting another’s business with yours, in an agreed ratio of ownership, to develop an idea in profit.
You are free to raise or deplete your capital; however the move will affect your right in the Joint Venture.
The responsibility here doesn’t lie on one end. Both the parties in Joint Venture are free to put forth ideas, expertise, and insights in taking forward the enterprise towards a new direction. The ratio of sharing will have both profits and losses, which will depend upon the synchronisation of hard work. No such boundaries of taking permissions or following procedures are necessary.
But if you do not have a prior experience in running business, it will be difficult to anticipate key turning points. Like in franchising, a franchisee can draw experience from its parent company; a Joint Venture demands both parties to recognise the ups and downs. If the business fails to impress its growth market, it will further impact the franchise reputation, and in a competitive atmosphere, customer distraction is no big deal. Or worse, without suffice knowledge the inexperienced one may submit itself as scapegoat in low phases.