This site provides New zealand Franchising Information on this powerful distribution method

In order to succeed as a Franchisor (the entity granting the right / licence) or a Franchisee (the entity receiving the right /licence), it is necessary to consider the advantages and disadvantages of involvement in a franchise system.

ADVANTAGES

• Low capital expenditure - franchising is an excellent method of expanding your business with a limited amount of ready capital.
• Personal commitment and motivation - the personal commitment and motivation from franchisees is greater than from employees.
• Reduced daily involvement - it is a method of obtaining conscientious and dedicated personnel who work hard to safeguard their investment.

DISADVANTAGES

• Loss of ownership - the franchisee has a licence to operate the business. Usually this prevents the Franchisor from competing in the territory in which the franchisee operates.
• Lower profits - the nature of the relationship between the Franchisor / franchisee means that profitability considerations need to have regard to both parties. As a rule of thumb, 90% of the profit should go back to the Franchisee.
• Interdependence - a large amount of management input from the Franchisor is required, you have responsibility for other people's futures.
• Substantial management and personnel skills are necessary to persuade the Franchisees to follow the Franchisor's directions for the sake of uniformity within the system.