Is Franchising Always More Feasible than Alternatives Like Startups and Joint Ventures?

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When it comes to conformance on quality standards, franchising is inarguably a better alternative. It keeps a check on the standards and the regulation in which the product or service is offered. With many startups revolutionizing the way products and services are offered, and always changing the way such offerings were perceived because of the uncommon growth rate, the instability the start-up ecosystem has to offer, as opposed to franchising, is something that is not as adored by emerging entrepreneurs.

Image result for barbeque Franchise

A joint venture, alternatively, is something wherein two entities come to form an agreement on the basis of mutual profits or loss, and have agreed upon providing resources to one another during a one-time deal or consequently during several years.  A joint venture usually occurs when most companies look for more competitive marketplace where they want to collaborate with an already establish business entity and reap benefits of the business success by a prosperous amalgamation of both these entities.

A franchise’s feasibility is highly determined by a range of associated factors. Few of them being is assessing the market potential, marketing strategies and policies, competition, target market etc. Joint ventures can always be more viable when it comes to maintaining an equilibrium in terms of a shared vision for both the entities involved. They usually share the profits equally, but are also treading towards the same path of a business story wherein the vision philosophy of the parties involved are aligned with everything that the company aspires to do in the longer run.

Benefits of franchising over startups:

  • The level of risk involved in the franchising ecosystem is way too low as compared to the startup ecosystem as new entrepreneurs always vouch to venture into something that is risk stabilized and earns them a defined profit.
  • In a franchising model of business expansion, the operational activity is often taken care of by the franchisor and they have a definite plan ahead of them as to how the goods and services will be handled and operated.
  • For startups and joint ventures alike, a deeper understanding of running a business coupled with an excruciatingly unique idea is required, whereas the franchising model is a tested model and often reaps benefits with a stabled outlook of everything.

In the United States, the franchising business has always been seen as a way to abide by the normalcy of business expansion as observed in the case of Dickeys Barbecue pit franchise, amongst other fast food chains in the U.S. Franchising involves very little risk, but then again, for people who are enterprising, can take risks and don’t want to just reinvent the wheel, but create something of their own with a moderately bigger investment and planning, strategizing and structuring the model, for them indulging in a startup or a joint venture seems more feasible than the former. However, as the olden saying goes, it is always better invest one’s time, effort and money with prospected benefits, hence franchising is always a win-win.