Will the franchisee route to a faster roll-out of retail outlets work for these jewellery brands? What are the pros and cons?
The question does not give any data of the jewellery brands to be marketed using franchise route, or the kind of franchise to be used. In this situation it is not possible to judge if franchise route will be right for this product, or to even identify pros and cons specific to this situation. However I am discussing below pros and cons of franchising in general.
Pros of Franchising:
- Franchising enables a company to expands its sales quickly
- Franchising enables companies to improve their brand and corporate image with limited capital expenditure.
- It reduces cost by the company to achieve economies of scale in purchasing, distribution, advertising and management.
- It is possible to control quality and service standards without getting involved directly in day to day operations.
- As compared to company employees the franchisees are likely to be better motivated for success of the business.
- Franchising generates additional revenue for the company in form of franchise fee.
Limitations of Franchising:
- Franchising requires existence of a clearly well defined and well proven business model to be followed uniformly by all franchisees. Such a model takes time effort and money to develop.
- Similarly control and supervision of franchisee operations require additional skills. A company that is able to run a business model successfully man not always have the skill required for implementation of such model in a franchise set up.
- Some franchisee may deviate fro the model prescribed by the company causing damage to the company's brand and corporate image. In such a situation getting rid of an unsatisfactory franchisee may not be easy.
- Setting up a franchisee business requires substantial investment of time and money in setting up the infrastructure, advertisements and development of franchisee. Unless the company is able to achieve the estimated level of operations through franchise operations, it may actually incur losses.