Every business has its own pros and cons and franchising businesses are no exception. Before using this trading option, you need to be fully aware of the ins and outs of this business. In considering a franchise business, everything is mentioned in a legal document called the master franchise document. This is a formal document signed between the franchising firm and the entrepreneur who is purchasing the license. Before entering in to a new contract, it is advisable that both parties should consult a franchise agreement template so that there are no issues later. It is obvious that franchising has more positive factors than negative ones. Let’s look at some of them.
The Brand Has a Well-Developed Clientele
This is the biggest difference between buying a franchise and starting a business from scratch. If you are buying a license from a well-reputed company, you don’t have to invest any efforts to attract customers because most people are aware of the name. This point also has its negative effect. Most brands state very strict conditions in the master franchise agreement because they don’t want to lose their reputation or face a reduction in customer count. Therefore, the franchisee should ensure that he maintains the reputation of the franchising firm.
The Franchisee Has to Fulfill Expectations
Most people interested in franchises do not have previous business experience. Hence, they face many problems when they try to implement business operations. A franchisor does not put its market progress at stake under any condition. Some firms allow a very small testing period to franchisees. These entrepreneurs have to prove their worth in this limited time period. This entire scenario can be termed as one of the disadvantages of the franchising business.
The master franchise agreement can be termed as the main source of interaction between the franchising company and the franchisee. Once this agreement is signed by both parties, the agreed upon points cannot be modified in any manner.
Franchising companies have predefined standards for quality control. Therefore, these companies expect the franchisees to maintain the same standards. Most of them are inexperienced and they find it hard to produce the same results initially.
If you are purchasing a franchise from a company, you should analyze the time period available to you to produce the required level of performance. This time period should be stated in the master franchise agreement.
A Well-Developed Advertising Campaign
If you have purchased a franchise from a prolific company, you don’t have to plan an advertising campaign because the customers are already aware of the product performance and the caliber of the franchising firm. This condition is mentioned in the master franchise agreement.