Scribd
Upload
55 views2 pages

Concept - Manufacturing Franchise Opportunity: These Kinds of Franchises Allow The

Franchising allows start-ups to succeed by using an existing company name and brand that has already established itself in the market. This saves start-ups effort, time, and money compared to creating a new brand. Franchising also allows start-ups to grow quickly despite increasing operating costs, as customers are already familiar with the brand. Some advantages of franchising for companies include quick expansion into new locations with less capital required than independently operating in each location. Franchising also provides cost advantages through bulk purchasing and the ability to advertise across a wide geographical area.

Uploaded by

NIAZ HUSSAIN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
55 views2 pages

Concept - Manufacturing Franchise Opportunity: These Kinds of Franchises Allow The

Franchising allows start-ups to succeed by using an existing company name and brand that has already established itself in the market. This saves start-ups effort, time, and money compared to creating a new brand. Franchising also allows start-ups to grow quickly despite increasing operating costs, as customers are already familiar with the brand. Some advantages of franchising for companies include quick expansion into new locations with less capital required than independently operating in each location. Franchising also provides cost advantages through bulk purchasing and the ability to advertise across a wide geographical area.

Uploaded by

NIAZ HUSSAIN
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Question 4

Identifying and explaining this concept.


Concept - Manufacturing franchise opportunity: These kinds of franchises allow the
company to produce and distribute the product to the public market, under the name and
trademark of the franchiser. That kind of franchise is mainly seen in the beverages and food
market. Many of the soft drink bottlers receive a company franchise and must use their
ingredients to prepare, bottle and circulate soft drinks.
How do Franchising help Start-ups:
1. Franchising allows start-ups to succeed as the company already has a name and which
is the most difficult to create in the market. Therefore, start-ups pay the franchisor 's fee
(royalty). Franchising provides a product that saves effort, time and money and thus helps
start ups.
2. Start-ups can grow quickly despite of having to increase labour costs and other operating
costs because customers typically walk straight up to them.

Advantages of franchising—to the Sun Beverages Ltd.


Quick expansion: By approving and offering franchises at various location a franchisor can
grow a business countrywide and even globally. The capital required for this expansion is far
less than it might have been without franchise model. Operating a franchised company needs
less workers than a non-franchised enterprise. Head office and local offices may be staffed
loosely, mainly to meet the franchisees' needs. This helps the franchisor to retain low payroll
and reduce personnel issues.
Cost advantages: The franchisor may then buy products in vast quantities, which would have
been otherwise difficult to reach economies of scope. Most companies produce and distribute
vast quantities of components, products, packaging and raw materials to the franchisors. The
ability to devote bigger amounts of money to ads is one of the main cost advantages of
franchising a company. This aggregation of resources allows the franchisor to perform
advertising in a wide geographical region in major media.
Question:3
Best overall mix of financing is the key challenge to start-ups, optimal capital structure is that
which results in maximum value. Financial mix will typically be composed of two
components: Debt and equity
So, an entrepreneur ensures the selection of best overall mix of financing for the enterprise so
that:
 The cost of capital and the financial risk (risk of bankruptcy) is minimized and the
capital structure can rapidly be assessed by calculating debt-to-equity ratio.
 b• The extent of stability in the business, its capacity to provide adequate collateral as
protection, the interest rate charged business  as well as legal or contractual debt
constraints are all factors that will affect your optimum debt-to - equity ratio.
 Return on investment and profitability is maximized.

You might also like