Answer :
Final answer:
A franchise offers a way to start a business with less initial capital by leveraging a proven model and support from the franchisor. It simplifies start-up, management, and can attract financial capital more easily than starting a new independent business.
Explanation:
A franchise can be an attractive option for someone who wishes to start a business without a large amount of capital. This is because a franchise allows the individual to open a business by purchasing the rights to use a proven business model from the franchisor. Additionally, the franchisor typically provides training, supply chain support, and assistance in setting up operations, which can simplify the process for the franchisee.
When starting a small business, like a restaurant or gas station, financing usually comes from the business owner's personal funds or through loans. The alternative path of seeking 'angel investors' comes with its own challenges, such as sacrificing equity and finding willing participants. Therefore, franchising can present a more accessible path to entrepreneurship with less financial strain, as the franchisor's support and recognition might also make it easier to attract financial capital.
Although starting a franchise requires payment of a franchise fee and ongoing royalty fees, the benefits of using an established brand and receiving support can outweigh these costs. Notably, the franchisee gets to enjoy the profits of a successfully managed business, and with an established business model, franchisees may find it easier to start and manage their venture as compared to starting from scratch.
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