ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The risk factor involved in any franchise is much less as of the startup business. There’s a very long list of licenses and regulations every business must follow to start their venture.

Detailed explanation-2: -Bottom line, franchises have a higher overall success rate than startups. Franchises operate under a predetermined business model that has already brought success while independent businesses make adjustments and decisions to their business model as they go.

Detailed explanation-3: -Like starting any business, buying a franchise involves risk. Although most franchisees are satisfied and successful, some do suffer financial losses. That’s why you must be particularly wary of any company that “guarantees” profit or certain success.

Detailed explanation-4: -That being said, the risk is lower when opening a franchise. One of the reasons franchise owners face lower risk than independent business owners is the franchise network. Most franchises are owned by established corporations that have tested and proven the business model of the franchise in multiple markets.

Detailed explanation-5: -Pro #3: Franchises are less risky than independent businesses. If you buy a franchise, you already know that the product is successful. It has brand recognition, for one thing.