For many owners of a successful business the desire and need to expand their concept becomes an ever more attractive option. The question for most is if they should expand through company-owner locations or by franchising.
Although franchising a business requires long-term commitment by the franchisor there are many reasons why a lot of companies have chosen it as a method for business expansion.
One of the most attractive reasons for franchising is that it costs less than opening up company-owned locations. The franchise owner will pay an initial investment fee to the franchisor, which covers all the training and support for the franchise owner and their staff, as well as the launch of the new location. Then once the business is operating the franchise owner will continue to pay either a monthly or yearly fee to the franchisor to continue using their business model and branding.
In addition, by franchising their business, franchisors do not have to invest large amounts of time and money into training managers increasing numbers of locations. Provided that the franchisor recruits their franchise owners carefully and they ensure they have the commitment and dedication needed, most franchise owners will have invested their own money into the business and will work hard to ensure that their franchise operates smoothly and successfully. As well as this, by signing the Franchise Agreement the franchisor owner will have agreed to abide by the franchisor’s Operation Manual, meaning that the franchisor will still control how each location is operated.
On the whole franchise owners will see their franchise as a ongoing commitment in which they have already invested a vast amount of time and money. This results in the franchise owner being fully committed to making their business a success and able to see the long-term financial benefits of ensuring that the franchise is a success. Additionally, because the franchise owner owns the business most will gain a great deal of pride from ensuring that the services and products they provide are of top quality, ensuring that the franchisor retains a strong brand reputation.
Many franchisors find that as long as they invest in marketing their franchise opportunity effectively, franchising leads to faster expansion. One of the main reasons for this is that locations can be opened simultaneously, as the franchisor only needs to ensure that each of its franchise owners is fully trained and supported especially in the build up to their launch. Franchise owners can also be recruited from across the country, therefore enabling franchise owners to already have a connection with the local community and able to use their knowledge to penetrate the local market.
Before a business owner starts franchising they must be certain that their business model can be successfully and profitably replicated. A potential franchise owner will want to be confident that they will gain financially from investing the franchise before they part with their money and time. Also being a franchisor is a long-term commitment and the franchisor must be prepared to provide ongoing training and support to their franchise network, ensuring that all their franchise owners have a chance to stay ahead of their competitors and run a thriving business.
Reported by Derin Clark