There are many ways in which two businesses join hands and reap mutual benefits. Franchising is one such form of association. Other forms are mergers and acquisitions, amalgamations, strategic alliances, partnerships, etc. In a franchising model, a franchisor grants licence or rights to a franchisee to do business on the franchisor’s behalf based on an agreed set of terms and conditions. For SMEs & Large enterprises this model helps them to reach out to new and larger markets. Franchising helps to reduce operational costs, focus on core competencies, and penetrate fast into existing and new markets.
Franchising has proven to be a very effective business arrangement when it comes to exploring new markets, especially, for global expansion. The benefits are localization, risk optimization, technology-sharing, reduced capital burden, a synergy of mutual experience and expertise, larger market share, better market penetration, vertical and horizontal integration, etc.