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Subway Franchise

In: Business and Management

Submitted By yort
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Subway Franchise
Course
Instructor’s Name
11 August 2012

Subway Franchise The franchise concept has several advantages for both the franchisor and the franchisee. For the franchisor, offering a franchise arrangement means an easy access to capital formation brought about by the investments of franchisees (Om Sai Ram Center for Financial Management Research, 2006). Furthermore, it provides incremental income for the franchisor through royalty payments. Another advantage of the franchise concept is that it makes possible a faster expansion program for the franchisor supported by motivated distributors in the person of the franchisees (Om Sai Ram Center for Financial Management Research, 2006). The franchisees stand to benefit too from a franchise agreement. The franchisee gets to experience entrepreneurial autonomy using a proven concept, often with extensive recognition of the brand name (Om Sai Ram Center for Financial Management Research, 2006). The franchisee also benefits from the training programs provided by the franchisor, coupled with continuing supervision of the store. Although there are advantages to owning a franchise, franchisees are faced with disadvantages too. Decision-making is quite limited since the franchisee should follow the guidelines set by the franchisor (Om Sai Ram Center for Financial Management Research, 2006). In terms of purchasing, the franchisee is forced to purchase supplies and equipment from the franchisor even if they are more expensive compared to other sources. They cannot carry other products and they must adhere to the quality standards of the franchisor. Moreover, most franchise agreements are skewed towards the franchisor. Profits are shared with the franchisor but not the losses. In case a bad image is experienced by one franchisee, all the other franchisees are affected. The...

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