The question does not give any data of the jewellery
brands to be marketed using franchise route, or the kind of franchise to be used. In
this situation it is not possible to judge if franchise route will be right for this
product, or to even identify pros and cons specific to this situation. However I am
discussing below pros and cons of franchising in
general.
Pros of
Franchising:
- Franchising enables
a company to expands its sales quickly - Franchising
enables companies to improve their brand and corporate image with limited capital
expenditure. - It reduces cost by the company to achieve
economies of scale in purchasing, distribution, advertising and
management. - It is possible to control quality and service
standards without getting involved directly in day to day
operations. - As compared to company employees the
franchisees are likely to be better motivated for success of the
business. - Franchising generates additional revenue for
the company in form of franchise
fee.
Limitations of
Franchising:
- Franchising requires
existence of a clearly well defined and well proven business model to be followed
uniformly by all franchisees. Such a model takes time effort and money to
develop.
- Similarly control and
supervision of franchisee operations require additional skills. A company that is able
to run a business model successfully man not always have the skill required for
implementation of such model in a franchise set up. - Some
franchisee may deviate fro the model prescribed by the company causing damage to the
company's brand and corporate image. In such a situation getting rid of an
unsatisfactory franchisee may not be easy. - Setting up a
franchisee business requires substantial investment of time and money in setting up the
infrastructure, advertisements and development of franchisee. Unless the company is able
to achieve the estimated level of operations through franchise operations, it may
actually incur losses.
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