What are the advantages and challenges of franchising as a type of strategic alliance?

Question

What will be an ideal response?

Answer 1

The advantages of franchising include the ability to expand a successful venture and to earn additional revenues without taking a large financial risk. In addition, the franchiser can retain control of its product and business model. Franchising can enable the franchiser to gain the advantage of being the first-mover in a market without having to take the risks of being a first-mover. Successful franchising requires close cooperation and communication between the partners. The franchiser must develop and transfer successful programs and the means of managing the operation to the franchisee. The franchisee must have the knowledge and the capabilities to compete in the local market. Franchisees must provide feedback to the franchiser about activities that work and do not work in the new environment. Franchisees must inform the franchiser about the important characteristics of the local competitors and market conditions.