Franchises as a Form of Business Start-up Essay

Franchises as a Form of Business Start-up - Essay ExampleThe Franchisee finds it easier to pay the sign and the royalty fees which ar way lower than the required capital cost. At a time when the cost has become an important aspect of the business, Franchising has become a winner for international companies that intend to penetrate as many markets as possible in their global business design strategy. McDonalds is among companies that have a claim in an effort to expand their business within unseasoned markets. The organizations have profited from rapid expansion, use of effective business models and reduced cost entering refreshful markets. From this note, franchising has become a popular practice due to its efficiency in business start-up.In the modern business industry, organizations are experiencing pressure to start new businesses in the international market as one way of appealing to bigger geographical space. One major driver for expansionism in business is the intensity l evel of local business markets. Before the 21st century, organization sharply focussed on the expansion of business within the local markets due to the increasing motivation for products within such markets. However, the demand in the local markets has reached a plateau phase and organizations can make little profits from these markets (Francois & Wooton, 2010). When demand remains flat, organizations are at the risk of incurring losses as expenses go higher while the profit remains constant (Garg, Priem & Rasheed, 2013). Consequently, organizations are forced to move extinct of the local markets and consider entering into new markets. Therefore, fall in demand within local countries has forced organizations to consider appealing to a broader geographical insurance coverage as the only way to remain profitable.Secondly, the upsurge of competition within local markets has motivated organizations to consider launching international business strategies.