Essay: Advantages of Franchising Subway

Sample Essay

The main reason for franchising Subway was that De Luca wanted to expand the business further. To expand and to expand rapidly from a total of 16 units to double that size in two years and meet their target (SUBWAY® Restaurant, 2008) required money and qualified people. Franchising was the best alternative.

The advantages of franchising are enormous for a franchisor. They include rapid expansion, more time available for other possibilities as day to day operations are handed over to the franchisees, instant cash flows, limited costs of overhead and many other advantages (Franchise Venture Capital, 2005).

The main disadvantage of a franchisor is the loss of control over the organization. Due to certain franchisees, the image of the company can be tarnished beyond repair. Another disadvantage is the decrease in flexibility for the franchisor. It will be harder to implement changes in strategy and tactics after franchising. And also, franchisees have invested a great deal in the business in terms of time and money and cannot be fired or disassociated easily (Butterfield Bakery, 2003).

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