Reasons to Franchise
Franchising avoids the problems of slow growth,
the problems of outside capital, and the problems of finding the right
employees. In short, franchising solves the problems of Money, Time, and
People. And it does so in creative ways:
Money
Franchising transfers almost the entire cost of
expansion to franchisees. Franchisees build the building or pay the rent, buy
the inventory, pay the employees and provide the working capital until sales
make the business profitable. And the growth of a franchise is limited only by
the number of people willing to buy the franchise and the number of locations
that can be sold. What is the cost to the franchisor? Often it is no more than
it would cost to establish a single new company-owned unit.
Time
Anxious to move quickly before the competition
catches on? Got a hot, new concept? Want to exploit a new marketing
opportunity? Franchising is the one growth system that allows businesses to
expand exponentially. A franchise can grow fast simply by selling individual
units. Some franchises can grow even faster by selling multiple units or
territories to sub franchises. Either way, it is usually faster to open
franchises than company-owned units.
People
“A good manager is hard to find.†Not exactly an
original idea. Studies show that franchisees make excellent managers. Why?
Because they have a vested interest in the business. They own it. Through
franchising, a company gets both dedicated managers and relief from the
problems associated with hiring and firing personnel.