Sources of Business Ideas
- Spotting Trends and Anticipating their impact
- Identifying a market niche
- Copying ideas from other countries
- Taking a scientific approach
Franchise: when a business (the franchisor) gives another business (the franchisee) the right to supply its product or service.
Benefits of Operating as a franchise:
- Involves the least amount of risk for start up businesses- as a result- a high percentage of them are successful.
- Franchise businesses usually have established brand names.
- Financing the business may be easier because banks are often more willing to lend money to someone wishing to buy a franchise with a proven reputation, to a new, unknown business.
- The franchisee is likely to incur lower advertising and promotional costs as the business is likely to benefit from national advertising or promotion from the franchisor.
- The franchisee usually has exclusive rights in his or her area
- Relationships with suppliers are likely to have been established by the franchisor.
- The franchisor offers support and training- usually funded by an ongoing management service fee paid by the franchisee.
Pitfalls of a Franchise:
- There is always a possibility that the franchisor has not researched the business carefully.
- Costs may be higher than expected- a franchisee must continue paying royalties to the franchisor after the initial costs of buying the franchise.
- Other franchisees could give the brand a bad reputation and this may have an adverse affect on all franchisees.
- The franchise agreement usually…