The Advantages and Disadvantages of Expanding a Business Through the Essay

Essays on The Advantages and Disadvantages of Expanding a Business Through the Use of Franchising Essay The paper "The Advantages and Disadvantages of Expanding a Business Through the Use of Franchising" is an outstanding example of an essay on marketing. A franchise can be described as a business agreement in which the franchiser (business owner) allows others (the franchisees) to own as well as operate a business on his/her concept and trade name. According to Tassiopoulos (2009), franchising is a proven business strategy developed by a franchisor that permits the franchisee to make use of its established trade names, propriety business strategy, and methods of carrying out business; in return for a recurring payment that involves a given percentage of gross profits or gross sales, along with a yearly fee.The concept of franchising has over the last couple of decades expanded internationally and has now become a common entry mode for numerous establishments. According to Tassiopoulos (2009), franchising comes along with advantages and disadvantages, with the underlying advantages and disadvantages being able to be presented at a domestic and international level. This particular paper, therefore, seeks to discuss the advantages and disadvantages of expanding business through the use of franchisees.One of the biggest advantages offered as a result of expanding business through the use of franchisees is self-funding expansion. According to Talloo (2007), a franchiser is able to expand the business rapidly without incurring much additional cost since the initial costs of creating and providing the franchise such as launch support, training, intellectual property rights, software license, and site selection are normally recovered by the franchisee. Additionally, investment requirements to open each business operation, including vehicles and staff recruitment, lease, store fittings, are undertaken directly by the franchisees.The ongoing costs of marketing, promotional activities, sales, websites, ongoing communications, providing support and managing the franchise ne twork are also met by an ongoing management service fee provided by the franchisee, normally a percentage of the franchisee’s turnover. The only costs met by the franchisor are that of the overheads that are not met by the franchisee's opening franchise fee (Moschandreas, 2000). Franchising as a business expansion strategy, therefore, requires less capital outlay compared to other business expansion strategies. Additionally, as a result of the self-funding expansion, franchisers find it easier to open multiple units, thus, gaining a competitive advantage on any prospective competitors. The multiple developments of units increase the firm’s advantage within the marketplace.Marks Spencer, one of the United Kingdom’s leading retailers of home products, clothing financial services, and food represents an example of an internationally franchising firm.