The economic recovery in Indonesia primarily due to because the formation of small businesses. Today this sector is considered as a necessary condition for stability of the entire system of the economy.
Current practice in advanced economies suggests that a major focus in creating a successful small business is the emergence of different network structures, where small businesses interacting with each other, form the perfect conditions for mutual support, thus, to create sustainable market relations. Early formation of Indonesia’s business infrastructure will contribute to the spread of franchising.
The transition to a market economy has led to significant changes in the structure of employment. Most people are not able to adapt to new conditions. As a result, many were left without work. In addition, decrease investment in our economy by the west to change the default that occurred in 1998 and the unstable political situation in the country. As a result, some foreign companies had gone with our market, freeing a niche.
One solution to these problems may be the emergence of network structures. Example is their work on the franchise system. This way of doing business there are lots of advantages, but there are also disadvantages.
The main advantages of franchising are the following:
- A ready niche in the market that allows you to quickly deploy their business;
- Minimum cost of development;
- Package instructions with information about raw materials, equipment, marketing, methods of work;
- Business confidence, which is linked with the reputation of the company owner;
- To provide cheap and high quality advertising;
- Small risks;
- The opportunity to purchase from the franchisor the right equipment at an affordable price;
- Training in business management;
Disadvantages are:
- Limitation initiative entrepreneur;
- The parent company can take any decision without considering the opinion of the franchisee.
Franchising helps solve the problem of unemployment by providing jobs to those who can not open a business, but wants to work productively. Encouraging the development of franchising and, thus, exercising control over the process, the state can accelerate the development of market infrastructure.
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