Franchise definition advantages disadvantages 2021 tutorial - What is a franchise: definition, advantages and disadvantages of setting up one and examples of the main franchises in the world.

Do you have the soul of an entrepreneur and want to run a business, but maybe you still don't have an original idea to start your own? Do you find too many obstacles and risks or do you want to have more experience and increase your income first?

Opening a franchise can be a good alternative for people who are in a similar situation, or for those looking to have a successful business owned without having to set up one from scratch.

In its first sense, the Royal Spanish Academy defines franchise as the "exemption that is granted to someone not to pay duties for the goods that he introduces or extracts, or for the use of a public service".

Its second meaning is the one that focuses more on the business idea outlined at the beginning. According to this, a franchise is a "concession of rights to exploit a product, activity or trade name, granted by an enterprise to one or more persons in a given area".

Franchise definition advantages disadvantages 2021 tutorial

In this way, a franchise is a commercial relationship between two parties, in which one company (franchisor) assigns the right to exploit a trademark or commercial formula to another (franchisee), in a certain place and time and under certain conditions, in exchange for financial compensation.

Thus, the franchisee pays an amount of money to the franchisor to have the license to market its products and services, as well as to use its trademark.

When setting up a franchise, it is necessary to take into account a series of considerations and assess the advantages and disadvantages of opening a franchise, both for the franchisor and for the franchisee.

Franchise definition advantages disadvantages 2021 tutorial

For the franchisee (who obtains the license), the franchise is the advantage of not having to start a business from scratch, which means at the level of risks and obstacles such as financing, market entry, becoming known, etc.

The franchise allows the entrepreneur to own the business without having to go that part of the way, and involves working with an already known and consolidated company, with a proven successful business model and a previous knowledge and experience that can be replicated.

Franchise definition advantages disadvantages 2021 tutorial

The franchisor, in return, expands its commercial activity thanks to this increase in its business units, efficiently and with little risk, and receives an economic compensation, known as an entry fee. You can also benefit from the franchisee's local knowledge and increased responsiveness to consumer needs.

On the contrary, for the franchisee to open a franchise may be the disadvantage of having to make that significant outlay, as well as not having full control of the brand and lack some independence.

On the part of the franchisor, one of the disadvantages is having to give up part of the turnover, in addition to running the risk that the new franchise will generate a negative impact on the global brand.

Franchises are increasingly important and common in Spain and throughout the world, and may belong to different sectors.

In Spain, there are 1,381 franchises, of which 82% are of national origin, according to the 2020 report of the Spanish Association of Franchisees (AEF). The sector with the largest number of franchises is fashion, followed by hospitality / catering and beauty / aesthetics.

Franchise definition advantages disadvantages 2021 tutorial

Some examples of franchises in Spain are the supermarkets Dia and Eroski Market, the restaurants of Pans& Company, Lizarrán, VIPS and Telepizza; and stores such as Zara, Mango or General Óptica, among many others.

Among the world's top franchises are Subway, KFC, 7 Eleven, Taco Bell, Dunkin' Donuts and McDonald's, as some examples.

Franchise definition advantages disadvantages 2021 tutorial

More news:

Sánchez brings together managers from Netflix, Amazon, HBO, Disney or Apple to vindicate the audiovisual hub that plans to increase 30% national production

The president of the Government has finished his tour of the United States with executives and entrepreneurs from the technology sector in search of investment. It has been a business trip, not a political one, so Pedro Sánchez has not been received by Joe Biden in Washington.

Yes it has been for top executives of Amazon, Apple, Netflix, Sony, Disney, Paramount, Warner/HBO, Universal Studios and Motion Picture Association, according to a press release that La Moncloa has sent on Friday morning. The closing of this tour sought to meet with entrepreneurs in the audiovisual sector to claim the Spanish audiovisual hub, an initiative for which investments of 1,600 million public euros have been announced until 2025.

The purpose of this audiovisual hub is to increase by 30% the audiovisual production made in Spain. To do this, administrative and regulatory burdens will be reduced, "the competitiveness of companies will be improved with the application of new technologies" and "and attract talent" will be built while "the gender gap is reduced", sources from Moncloa explain in a statement.

"Spain has a rich audiovisual ecosystem, with talented professionals and creative industries that are proving to be very successful in the development of television series, video games and other productions", has claimed Sanchez in front of the high charges from Netflix, HBO, or Amazon, among others.

The Government hopes that through an increase in public investment in education, "especially in vocational training and acquisition of new digital skills", Spain will allow "to give a boost to the entire value chain of the audiovisual industry". In fact, the Government claims that, "beyond the natural qualities", the sector has a huge opportunity in Spain thanks to"the deployment of the most extensive fiber optic network in Europe".

The 30% increase in Spanish production is expected to be a reality by 2025. In the opinion of the president himself, after his meeting with the managers of the large streaming platforms and international producers, "the Spanish brand" is demoda in audiovisual narratives, something that is already "a sign of excellence".

"Spain is in a solid starting position to become a leading audiovisual hub in Europe and the world," he concluded.

The Government is preparing to transpose a European audiovisual directive, which is already late at the moment. One of their preliminary projects already raised the need for platforms such as Netflix to allocate 5% of what they generate in the country to the production of European works.