Two franchising experts recently debated the issue of whether new college graduates should consider franchising as a pathway to entrepreneurship. lett Elgin said recent college graduates are not ready to be franchise owners. "First, most recent college graduates don't have the financial resources to fund a franchise start-up. Second, many lack the life experience and the motivation to run business effectively and stock with it when times get tough." Jennifer Kushell said franchising is the perfect career choice for many recent college graduates, for several reasons (1) the support system that franchising provides is ideal for young entrepreneurs, (2) young people have grown up with franchising and understand it well many college graduates aeady have launched businesses of their own, and (4) they think big. Which view do you think is correct? Explain

 

Answer:

  Jeff Elgin and Jennifer Kushell have different ideas on whether or not recent college graduates should consider franchising as a path to entrepreneurship. While Jeff believes that college graduates lack the financial resources, technical abilities, and personal skills essential to manage a successful franchise firm, Jennifer counters Jeff's claims by stating that young people have grown up with franchising and have a thorough understanding of the idea. Furthermore, the level of assistance provided by the franchising business model is enormous, and it is sufficient for them to create and maintain a profitable firm. Although it is impossible to tell which point of view is correct, the question of whether fresh college graduates should pursue entrepreneurship in the form of franchising is still debatable. Without a question, franchising comes with its own set of risks and challenges.

                      As Jeff correctly points out, owning a franchise requires a significant financial investment, and franchisees must pay expensive franchisee fees ranging in the millions to obtain license to utilize brand features and essential infrastructure to create those items. In most cases, the franchiser company requires that the franchisee owner own large real estate in high footfall geographic locations in addition to the one-time franchisee cost that must be paid upfront, so that the franchisee owner's chances of having a successful business are high and the franchiser company's risk, both monetary and reputational, is low. In addition to the start-up costs, the franchisee owner must pay overheads such as salaries, rent (if it does not own its own property), power bills, a monthly royalty on sales income to the franchisor, and other incidental charges. Jeff is correct in stating that investing such a large sum of money in a franchising firm is extremely difficult and risky for a college graduate.

                    On the other hand, Jennifer holds the position that for a recent college graduate who is able to make all of the necessary financial arrangements to own a franchise firm, there is no better way to enter into entrepreneurship than franchising. The following are some of the benefits of being a franchisee of a well-known firm for new business owners:

Immediate recognition 

After all, who hasn't heard of Pizza Hut, McDonald's, Domino's, or KFC? A person who owns a franchise of a well-known brand or business does not have to commit time, energy, or money in creating a brand. They gain instant notoriety and a ready-made brand, and all they have to do now is focus on operating the firm efficiently.

Supply Chain That Has Been Established

Any franchiser company expects its franchisees to be consistent in all aspects of their operations. Big brands have a well-established supply chain, with vendors and suppliers that offer various sorts of raw materials already empanelled. These sellers offer items at the most competitive prices, so company owners don't have to worry about building a competitive edge.

Marketing Assistance

All of the major franchiser businesses often have substantial marketing expenditures of their own. A tiny percentage of the marketing money necessary to advertise and promote the business is included in the franchisee fees. Because franchiser corporations are capable of executing nationwide advertising campaigns, franchise firms have unrivaled visibility.

                                       In my conclusion, the franchise business model has its own package of advantages and disadvantages, as well as opportunities and difficulties, and it is up to college students to select what sort of professional path they want to pursue.