Franchising vs Starting from Scratch: Jean's Dilemma
Jean's Concern About Franchising
Jean's key concern about franchising is the financial commitment required; she must pay an initial franchise fee and continuous royalties despite the associated benefits of marketing support, management advice, and a business model.
Explanation
Jean's key reservation about pursuing a franchise as opposed to opening her own gym from scratch is that Jean must pay a franchise fee to get started, along with a certain percentage of profits. This is a common concern with franchising. In exchange for the proven business model, brand recognition, training, and support that a franchise provides, franchisees like Jean are expected to pay an initial franchise fee along with ongoing royalty fees, which are usually a percentage of the revenue generated.
Although Jean gets marketing support, management advice, and a tested business model from a franchise, these benefits come at a cost which would potentially affect her profit margins, especially in the initial stages of the business.
Jean is concerned about which aspect of franchising compared to starting her own gym? Jean's key reservation about pursuing a franchise as opposed to opening her own gym from scratch is that she must pay a franchise fee to get started, along with a certain percentage of profits.