Problems and Challenges Faced By Franchise Model

Abstract

This research report titled \"Problems and Challenges faced by Franchise Model\" delves into the intricacies of the franchise business model, it is aiming to know the problems and challenges faced by franchisee, to know how franchisee taker tackled problems and challenges, to know which kind of strategy use franchise taker for marketing and improvement. The study employs a descriptive and research design with a focus on individual franchise holders in Ahmedabad, utilizing primary data collection methods such as Google Forms and personal interviews. Secondary data from previous research papers and magazines supplements the analysis. Statistical tools like Microsoft Excel 2021, SPSS, and Google Forms aid in data analysis. Despite constraints like limited time and geographic scope, the study offers valuable insights for stakeholders in the franchise industry. Findings from this research can enhance operational efficiency, inform decision-making, and contribute to sustainable growth within the franchise model. In conclusion, while operating a franchise presents various challenges, strategic focus on areas such as maintaining consistency in quality, investing in training and skill development, and enhancing online presence can greatly contribute to success. Franchisees who prioritize adherence to brand standards, adaptability to local markets, and foster strong relationships with both franchisors and employees stand a better chance of overcoming barriers and thriving in their businesses.

Introduction

I. INTRODUCTION

Franchise has become an increasingly popular business model around the world  but with great things comes problem and challenges. There are many problem and challenges faced by the franchisee holder like reduction in profit , high operating cost , meeting customer expectation. However, like any business model, there are several problems and challenges that franchisees may face when operating within a franchise system. In the study we well take swot analysis of  the  franchise taker  and we will find the solution for the franchise taker. One common challenge faced by franchisees is the lack of control over certain aspects of their business. Franchise agreements typically include strict guidelines and operational procedures that franchisees must adhere to in order to maintain consistency across the franchise network. This lack of autonomy can be frustrating for some franchisees who may have different ideas or approaches to running their business. Another challenge faced by franchisees is the financial investment required to start and maintain a franchise. While franchising offers the advantage of a proven business model and brand recognition, franchisees often need to pay significant upfront fees, ongoing royalties, and other costs associated with operating within the franchise system. This financial burden can be a barrier for some potential franchisees, especially for those looking to start their first business. Additionally, franchisees may face challenges related to competition within the franchise network. Depending on the size and structure of the franchise system, franchisees may find themselves competing with other franchisees for customers, resources, and territory. This can create tension and conflict within the network, making it difficult for franchisees to thrive and succeed. Finally, franchisees may also face challenges related to support and communication from the franchisor. Effective communication and support from the franchisor are essential for franchisees to succeed, but some franchise systems may lack the necessary resources or infrastructure to provide adequate assistance to their franchisees. This can leave franchisees feeling isolated and unsupported, making it harder for them to navigate the challenges of running a franchise business. Overall, while the franchise model offers many advantages, it is important for potential franchisees to be aware of the potential problems and challenges they may face when entering into a franchise agreement. By understanding these challenges and taking steps to address them, franchisees can increase their chances of success within the franchise system. The journey of a franchisee is a multi-faceted expedition, marked by financial considerations, brand alignment, competitive dynamics, and external uncertainties. Successful franchise ownership requires a nuanced approach, blending entrepreneurial spirit with a commitment to the established framework.

As franchise takers navigate these challenges, they contribute not only to their individual success but also to the resilience and evolution of the broader franchise ecosystem.

II. OBJECTIVES

1. To know the problems  and challenges faced by franchisee
2. To  know  how  franchisee  taker  tackled  problems and  challenges
3. To  know  which  kind  of  strategy  use  franchise taker for  marketing and  improvement.

III. LITREATURE REVIEW

The literature review on problems and challenges faced by the franchise model highlights key issues such as lack of control over business aspects, financial burdens, and operational constraints within franchise agreements. Franchisees often struggle with maintaining consistency, high operating costs, and meeting customer expectations. Research emphasizes the need for understanding franchisee challenges to enhance operational efficiency and sustainable growth. Studies like Mohd Faizal Abdul Ghani et al.'s exploration of franchising growth factors provide valuable insights for both franchisors and franchisees in improving performance and overcoming obstacles in the franchising industry. n a recent study, Pethers and colleagues (2021) utilized simulation techniques to tackle operational issues in a franchise resale store, focusing on issues like long queues and customer dissatisfaction. The research involved surveying 176 individuals and analyzing data to improve operational efficiency. Sonali Deepak Raje (2022) delved into the world of food franchising in Mumbai, examining both the positive aspects and challenges faced by franchisors and franchisees. By employing a mix of research methods, the study provided valuable insights into the food franchising industry in Mumbai, offering suggestions for enhancing performance and addressing challenges.

IV. RESEARCH METHODOLOGY

Research Methodology is a way to explain how a researcher should carry out his intent research. It's a logical, systematic plan to resolve a research problem. A researchers details found out through the research methodology on a particular concept selected must be valid and reliable towards its aim and objectives. It is important to ensure that what data is going to be collected and from where, and also how it’s being collected and analysed.

A. Scope of the study

The scope of the study is Franchise Takers reciting in Ahmedabad City. We will contacting them, who purchase a franchise within year it will be beneficial for franchise takers. The research will give an insight about problem and challenges faced by franchise model.

B. Need of the study

Studying problems and challenges faced by the franchise model is crucial for businesses and researchers to understand potential pitfalls, enhance operational efficiency, and devise strategies for sustainable growth. It helps identify issues such as franchisee dissatisfaction, inconsistent brand representation, legal complexities, and market competition, ultimately contributing to the development of effective solutions and informed decision-making within the franchise industry. Studying problems and challenges faced by the franchise model is crucial for businesses and researchers to understand potential pitfalls, enhance operational efficiency, and devise strategies for sustainable growth. It helps identify issues such as franchisee dissatisfaction, inconsistent brand representation, legal complexities, and market competition, ultimately contributing to the development of effective solutions and informed decision-making within the franchise model.

1. Research design:- Descriptive research design

Sampling design

• population elements  : individual holding  any  type of  franchise
• elements: one  franchise holders
• Sampling frame: franchises from Ahmedabad
• sampling size: 150
• Sampling method: non-probability convenience

C. Data Collection Sources

1. Primary data is collected through google forms and personal interviews of the samples.
2. Secondary data is collected from previous research papers and magazines.

D. Statistical Tools

Microsoft Excel 2021, SPSS and Google Forms is used for data analysis. For the measurement and analysis of the information gathered, appropriate mathematical and statistical techniques used.

E. Limitation of the study

1. Limited  time:- The most unavoidable limitation lies in this study is the limited time constraint for conducting the research, as we got a time limit of 2 months it was not possible to conduct a detailed collection of data from throughout India.
2. Lack of respondents:-The major another problem is lack of respondents it is hard to get the respondents for the survey and it is the long process to convince respondents.
3. Limited  geographic area:- The study is limited to the city of Ahmedabad.

VI. FINDINGS

Data  clearly  show  that  most  of  franchise  taker  take  Food  and  Beverages  franchises.

Survey  data  show  that  commonly  franchise  taken  time  is  3-5  years and  7.6%  franchiser  holding  franchise  more  than  8  years. Opportunity  for  growth  and  profit  is  most  motivational  factor  taking  franchise  and  also  31%  franchise  taker  motivated  to  Desire  to  be their  own  boss. Franchiser  to  select  particular  brad  franchise  before  some  aspect  to  be  consideration  such  as  Available  opportunities  in   target  market, Personal  interest  in  the  brand, Recommendation  from  a  trusted  source  and  do deep  research  and  analysis. the  biggest  challenge  when  starting  a  franchise  is  Finding suitable location  and  high startup costs. Major  financial challenges  in  franchise  models  include  is  Profitability Concerns, Operational Costs  and  Initial Investment Strain. Major challenges  in staffing and hiring suitable employees for  franchises are  hard to find the right people, keeping employees around  and  other franchisers snatching talent. Most  of  franchise  taker  tackled  challenges  by  Communicating concerns directly with the franchisor  and  Taking external professional advice. Most  of  franchise  taker  handle the pressure of meeting sales targets and revenue goals by  continuous  training  and  skill  development, Effective  time  management and  collaboration  &  teamwork. franchise business  taker  deal with economic fluctuations and market uncertainties  by  monitor  market  trends  and  Flexible  budget  plan. Franchise  taker  handle competition from other franchise businesses in the same industry by customer  service  excellence, Regular  market  research  and  unique value proposition .Franchise taker  faced  difficulty  in  maintaining   consistent  quality  standards. Market  research, innovation  workshops  and  Feedback  loops  this  strategies  uses  by franchise  taker  to  continuously improve and innovate  their  business. Most of the franchise owner use online presence, promotional offer and local advertisement for promoting there franchise and it is the efficient way for it. The mostly primary problem faced by franchisees in meeting customer expectations are Difficulty in adapting to changing customer preferences  and  Inconsistent product/service quality across locations. Most of franchise have problem with  limited funds for marketing and advertising,  reduced ability to invest in necessary equipment and resources while giving high franchise fee. advantages of choosing a franchise model for a business  are  Access to an established brand and customer base  are  Ongoing support and training from the franchisor. High-quality products or services, Convenient location, Excellent customer service and Competitive pricing are the elements contribute to a satisfying franchise experience. Most of the people are overall satisfied with the franchisor's support, guidance, training and programs.

VII. ACKNOWLEDGEMENT

Getting this opportunity, we are glad to express our sincere and profound sentimental of gratitude to all those who rendered their valuable help for the successful completion of this project report entitled “Problems  and  Challenges  faced  by  Franchise  Model ”. We are also thankful to all for sharing their veracious and illuminating views on the issues related to the project. We would also like to thank Dr. Smruti Vakil, under the guidance of whom we are able to grab this opportunity and get the chance to showcase this report in engrossing and fascinating manner. Our authentic sense of gratitude goes to GLS University that gave us a chance to illuminate us academic talents and qualifications.

Conclusion

Having a franchise means you are in the business by yourself, but of course, it is not without its difficulties. The franchisees encounter difficulties in several fields that include finance, management, and brand management. Even though these barriers are great, their understanding and being strategic about them may be of great help to the franchisees in reaching success. The findings revealed that franchise taker focused on such area as consistency in quality, training and skill development and online presence. Through rigorous evaluating of franchise openings, getting enough money, following brand standards while adjusting to local markets, and building strong links with both franchisors and employees, franchisees can increase the prospect of overcoming these difficulties and having successful businesses.

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Copyright

Copyright © 2024 Yatin Bamnoliya, Rudra Vyas, Bhavya Satyadev, Nandakishore Nair, Mitulsinh Chavda, Anish Patel, Prathmesh Parmar, Sarthak Ruia. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.