Having a franchise can help you run a business more efficiently. The process is simple, affordable, and less risky. It has social and economic benefits, as well.
Liability
Despite the fact that franchising has grown into a booming business, it also carries a variety of legal risks. Some of these include the possibility of vicarious liability. The definition of vicarious liability differs from state to state. Whether or not a franchisor is liable depends on the degree of control retained by the franchiser.
A franchisor is typically not liable for the actions of its franchisee, but there are certain exceptions to this rule. A franchisor may be held liable for the actions of its franchisee’s employees if the franchisor exercises supervision over the operations of the franchisee. In such cases, the franchisor may be able to defend itself against claims from its employees.
A franchisor should not exert excessive control over its franchisees. This can lead to a double-edged sword. If the franchisor retains too much control, it may be subject to personal injury lawsuits based on premises liability laws.
In determining the level of franchisor control, plaintiffs’ attorneys will look at whether or not the franchisor exerted sufficient control to prevent the franchisee’s wrongful conduct. If the franchisor was negligent or did not maintain safe working conditions, it may be liable for damages.
Cost
Choosing a franchise to expand your business can be a costly endeavor. While there are many low-cost franchise opportunities out there, there are also quite a few that cost thousands of dollars. Here are some of the typical costs involved in opening a new franchise.
The initial franchisee fee is a one-time upfront cost to the franchisee. This money is used to cover the franchisor’s initial expenses, such as providing assistance to the franchisee, advertising, and training. It is typically around $25,000 to $50,000.
While the initial fee might cover your franchise’s startup costs, it won’t cover the costs associated with building the business. These costs may include construction fees, furniture, paint, and other red tape.
The cost of a full-sized four-color brochure that sells the benefits of a franchise is a common cost for many new franchises. It costs between $8,000 and $10,000 to create a good brochure.
The cost of a separate franchise website can vary depending on the site’s vendor. A small website for a single location could be free, while a separate website for multiple locations can cost thousands.
Social aspects
Among the most exciting developments in the franchise sector is social franchising. This new strategy allows proven social change projects to be adapted into local ‘franchises’. This model provides social enterprises with economies of scale and the opportunity to rapidly grow.
A social franchise has its own funding source, legal documentation, and quality assurance mechanisms. It is also required to undergo education, training, and support.
Social franchising is a growing concept and has been used consistently in parts of Asia and Africa. It is also used in the charitable setting, in some health care programs, and in other industries, such as energy saving.
The Health Foundation carried out a research programme in the UK to assess the impact of social franchising. They supported four teams in a three-year study. They developed social franchising models, commissioned an independent evaluator, and tested new approaches to scaling interventions. The results indicate that there is great potential for social franchising in the UK.
According to the International Centre for Social Franchising (ICSF), there are currently 140 social franchises operating in different countries. These social franchises are generally focused on providing employment to disadvantaged people, halfway housing, renewable energy, recycling, and healthcare.
Ease of operation
Depending on the type of franchise, there are several advantages to operating a franchise business. One advantage is the ability to manage a leaner organization, with less staff, and fewer responsibilities. Franchisors typically take care of a number of responsibilities, which can help a franchise owner focus on improving the overall business and its performance. However, a franchise owner will also be responsible for managing his own unit, and may have to find a replacement for a crew member who calls in sick.
Another benefit is the use of franchisor-supplied products. As a franchise owner, you must purchase these items through the franchisor. This allows you to have a predictable pricing structure, and a uniform product offering at each location. A franchisee has the responsibility of keeping his inventory levels updated, but he does not have to worry about major pricing issues.
