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Franchising as a growth strategy thrives because it allows everyone involved to accomplish their goals, by helping others get what they want. The franchisor seeks to limit risk while maximizing earnings by partnering with franchisee.
The franchisee also seeks to limit risk while maximizing earnings by buying into a proven system. Franchisees want to be in business for themselves, not by themselves. |
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| There are a number of reasons that business owners often prefer franchising as a method of expansion, including: |
- Brand Awareness: Franchising establishes your brand quickly through expansion and corporative advertising
- Less Risk: Franchisees assume the risk by providing the investment capital and accept the operational and legal responsibilities of setting up a business
- Stream of Income: Royalties provide an ongoing stream of income
- Better Buying Power: Growth leads to greater leverage in negotiating pricing with vendors, thus making company owned and franchised stores more profitable
- Less Disruption: Your original business is maintained without disruptions, while franchise expansion goes on
- Better Ideas: Franchisees are a great source for new ideas that can be used in your own business and the franchise network
- Product Development Payoff: New products and services can be marketed through your stores as well as the franchisees, thus increasing your return on investment
- Quality Control: Legal requirements lead franchisees to follow the franchisor’s system
- Globally Focused Strategy: Skilled business leaders can look at issues globally rather than focusing on day-to-day operational issues
- An Exit Strategy: A growing and profitable franchise brand is a highly marketable commodity, verses a company owned store
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