In order to quickly and efficiently organize your own business, usually requires not only certain skills and knowledge, but also significant financial resources. Now, beginning entrepreneurs have two ways to organize their
business. The first of them provides for the independent creation of a business and its promotion. The second is to cooperate with a company that has been on the market for a long time and has already earned credibility. In economics, this phenomenon is known as franchising. In this case, you can’t do without investments, but you can still significantly reduce costs. Using a franchise, the cost of which can be very different, often allows novice businessmen to get around a number of problems that are inherent in a new business. Franchising without investments has its advantages and disadvantages.
Among the advantages, first of all, it should be noted the possibility of significant savings in money for starting a business. A company that sells a franchise is also interested in positive results, because we are talking about its credibility. Representatives of the franchisor will certainly advise the newcomer regarding the correct and efficient use of materials and equipment, work with suppliers, the sales system and other issues. Due to the fact that the development of the company is due to the attraction of other people's resources, changes in profits in its balance sheet occur very quickly compared to other methods of doing business. Plus, you can also earn without investments by using a developed brand. This also includes her marketing schemes and advertising. Moreover, the consumer of services and goods often has no idea who their supplier is.
There are also drawbacks. If you understand it well, we can conclude that, in principle, franchising without investments is impossible. Like it or not, but you will have to pay for the franchise itself. In addition , an entrepreneur who decides to take the partnership path of doing business becomes a hostage to the franchisor in terms of limited choice of his own development strategy. As practice shows, a franchise purchase agreement is signed for a very long time, so stopping cooperation is very problematic. If an entrepreneur gets tired of doing business like this and decides to stop fulfilling his obligations, sanctions will be applied to him.
Despite everything, franchising without investments is now very popular in many world countries. According to the statistics of American researchers, in the United States during the first year of activity, on average, three out of four established enterprises break up. At the same time, more than 85 percent of companies operating under the franchise system are sure to survive and feel very good. Theoretically, you can pay nothing for a franchise and take it for free. However, as practice shows, such an asset can hardly be called valuable, since such companies are practically not viable. An enterprise unable to sell its business is unlikely to sell products. A striking example of such an idea of a business without investments is network marketing, which is unlikely to bring the desired income.