Ralph Emerson’s interest in buying a franchise of Pipe Dreams is vulnerable to the advantages and disadvantages related to any franchise deal. In franchising, the biggest advantage is that relatively small investment in relation to the bigger market players and shortening of the learning curve. Since Ralph already has an adequate amount of capital, for him the biggest advantage is the steep learning curve in the form of trainings and sophisticated inventory levels.

The support of the franchisor makes a huge difference in terms of market exposure, innovative and well-tested ideas and experience, which has trial and error working on the back end. One other advantage is that the business expansion takes place in a short period of time. On the other hand, the biggest disadvantage is that even after the franchisee is comfortable in the daily operations, the royalties and fee are to be paid.

Another aspect is that the autonomy and empowerment may be limited despite the learning having taken place. Also, the franchisor may take strategic decisions that affect the franchisee in a negative way. The franchisee is also governed by clauses that require limited product/service offering, renewal requirements, marketing fees and continuous monitoring which may not be necessary in a particular case.

In short, the franchise operations are standardized and do not cater for individual cases and in a small town like Ralph’s may not be a good idea. As Ralph has capital, he should study his target market and then put the ideas that he has for a tobacco shop in action because the town may not require a huge franchise like Pipe Dreams. This way, he will be able to own his business and though the learning curve may be long, he will be the only one to reap the benefits.

Keywords : Term Paper, Business, Advantages & Disadvantages of Franchising

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