Benefits of Franchising Your Business
Franchising requires less capital than other growth methods
Franchising permits your company to grow with capital invested by individual franchise owners.
Rapid Expansion
In today’s marketplace, the window of opportunity for a new or unique business concept closes very quickly. Franchising permits multiple units to be opened simultaneously, gaining a foothold over would-be competitors.
Market Dominance
Multiple units in a territory increase the company’s competitive advantage over similar type businesses.
Franchising ensures that qualified managers are operating additional units
Franchisees are motivated by their ownership of the business and capital they have invested. A new business demands a great deal of time, effort and sacrifice. With their capital at risk, franchisees are typically much more motivated then employees.
Franchise units tend to operate better and more profitably than company owned units
Once again, this is due to the fact that a highly motivated owner is running the business rather than an employee. And franchising permits a company to exercise a great deal of control over the individual franchise locations.
Greater Buying Power
Franchisors that purchase products and services for their franchise network often negotiate volume discounts from vendors and suppliers. This provides higher operating margins to franchisees and a competitive advantage over similar businesses.
Increased Name Recognition
As additional locations are opened, name recognition increases. This further enhances the value of the business as well as the individual franchises.
Increased Advertising and Marketing Budget
Franchisees often contribute a percentage of their gross sales to an advertising fund created by the franchisor. This enables the franchisor to advertise in major media, further increasing name recognition and the value of the business.
New revenue streams are created
Franchisors can earn additional revenue from the following:
Franchise Fees
Franchise Royalties
Advertising and Marketing Fees
Services provided to Franchises
Sales of Private Label Products
Sales of Supplies
Training Fees
Sales of Promotional Products