Options Available to Entrepreneurs: Franchising and
Outsourcing
Franchising:
Definition: Franchising is a business model where a
business owner (franchisor) licenses the rights to their business model, brand,
and intellectual property to another individual or entity (franchisee) in
exchange for a fee or royalty.
Example: McDonald’s operates through franchising in India,
allowing franchisees to run McDonald’s outlets under its established brand and
operational model.
Advantages: Provides a lower-risk way for entrepreneurs to
start a business, as they benefit from an established brand, business model,
and support system.
Disadvantages: Limited control over business operations and
a requirement to adhere to the franchisor’s guidelines.
Outsourcing:
Definition: Outsourcing involves contracting out certain
business functions or processes to external service providers, allowing
entrepreneurs to focus on their core business activities.
Example: Infosys and TCS provide outsourcing services
globally, handling IT functions for companies that choose to focus on their
primary business operations.
Advantages: Cost savings, access to specialized expertise,
and the ability to scale operations without significant capital investment.
Disadvantages: Potential loss of control over outsourced functions, reliance on external providers, and challenges in ensuring quality.
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