Chapter 2. The Advantages of Franchising

As with many modes of doing business, franchising has its advantages and its disadvantages. Successful entrepreneurs and managers understand the advantages of franchising and compare them to the disadvantages to determine whether to adopt franchising in their firms. This chapter explores the pros of franchising, while Chapter 3, “The Disadvantages of Franchising,” discusses the cons of this organizational arrangement.

For franchising to be advantageous, two conditions must be met. First, a chain of outlets must be superior to independent businesses seeking to serve customer needs (perhaps because standardized procedures and the system brand name give the chain an advantage). Second, the chain must be better ...

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