Why the franchising mode most frequently deployed within the hospitality service sector? THANKS! (o^v^o)?

Question

And what is the advantages and disadvantage by use of franchising in the hospitality sector? Pls give some examples with the hospitality sector THANKS!!

Answer 1

I am unsure as to what you are asking for here, but here is my opinion of the matter.

First off, franchising is useful to insure that a start-up does not fall victim to corporate litigation. That is, a 3-unit business is not sued by a mega-corporation for similar name or business concept.

Second, it is often the case that the parent corporation is seeking to move the existing units from corporate to franchise in order to cut costs. Often, this is a result of negative cash flow on the part of the units, with the hope that a local franchisee can tap into the local market with improved results. Also, while costs of operation will remain constant for the franchisee, likely the agreement for franchise rights would include an increase in rates and costs, passed on to the consumers/customers.

Finally, the start-up costs for purchasing a franchise can be significantly lower than the start-up for a new concept. Real estate, building and renovation costs, and licenses which are included in franchise costs still need to be covered by private business-people.

Answer 2

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