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10 Reasons to Step into Franchising

If you are already running an established business and are wondering how best you can approach expanding your business- consider franchising. Why? View the following top ten reasons why franchising is good for business expansion:


1. Achieve Faster National Exposure

Your business will grow much quicker as a franchise network than an independent sole trader. New outlets will add to your business portfolio and increase your exposure, profitability and sense of business success. The costs you pay at the beginning to transform your business into a franchise will be paid by costs retracted from franchisees investing in the business.

Also costs incurred from setting up independently owned business outlets will be much higher than the costs you will have to pay for franchisee training, PR, launch assistance and so on. The long term benefits of franchising far outweigh the benefits associated with setting up independent business outlets.


2. Attract Like-Minded Business Entrepreneurs

By the time you recruit a franchisee, they will have been through a rigorous selection process, personal and professional questions, and much more. Thus, you will be certain that when the franchisee takes on to invest in your business, they will share your passion for the business model and your vision for its future growth and profitability.

This is the great thing about franchising your business- knowing that other people share your business dream and will put all their effort into making it a success. They will be more motivated and hard working because they are sharing a business dream that works for them, rather than independent business managers who are salaried by you. Franchisees have a vested interest in the business because simply, there livelihoods depend upon its success.


3. Reduce your Competitor’s Abilities

As you recruit more and more motivated franchisees and gradually grow your business franchise network, you will be in essence “weeding” out the competitions stronghold in the market your business franchise is located. In other words, as you grow stronger and bigger and draw in existing and new customers with a “new product or service” that’s different from the competition- you will be reducing the competitions impact on its consumer market.

The potential for you to attract more customers through effective marketing and advertising campaigns both on a local and national level will ensure your success against the competition of independently owned businesses.


4. Maintain Effective Service

One thing is certain when you franchise your business and that’s the continual recognition of the one brand your franchise will offer. All of your franchisees will be implementing the same business model functions and will ensure the highest quality of service and product despite where each business is located and this will generate and maintain loyal customers. Customers will receive the same “quality of service” set down by you as the franchisor in any franchise outlet the customer decides to visit.

5. Local Knowledge

As an independent business owner you may want to expand the business in many different locations. But researching a particular location for your business can be expensive and time consuming. However, expansion through franchising and potential franchisees eliminates the need for research as the potential franchisee will bring to the table a wealth of information that will be invaluable for the business network expansionist objectives. You can tap into local business knowledge which you may otherwise have been unable to attain.


6. Group Purchasing

As a franchisor of an established franchise network you will be able to take advantage, as well as your franchisees, of centralised buying power from suppliers and manufacturers. An independent business owner would find it more difficult to buy in bulk and budget constraints would hamper their buying power. As a result of this, your franchisees will be able to offer services or products at a much lower price, once again beating the competition hand down!


7. Dedicated Distribution

As a manufacturer or service provider, establishing the sales function of your business as a franchise operation provides you with a distribution network that is entirely focused on the supply of your product or service to your customers.

8. A problem shared is a problem halved!

If you choose to franchise your business you pass the responsibility of the business management onto your franchisees. This reduces the stress or problems you may incur as a company owner of a chain of independent business outlets where you will have to take care of management of all outlets. In franchising, the franchisee will act as your manager of its individual unit and will work to the best of his/her abilities since it is a vested interest for them to do well. As a franchisor you can set out in your operations manual a section dedicated to management structures and guidelines and benefit all franchisees involved.

9. Advertising

As your network develops all of your franchisees will benefit from group advertising campaigns initiated by you, at a national and local level. Creating effective communication links between all franchisees- regular coffee lunches (telecommuting if possible), annual meetings and conferences etc- will aid feelings of “community” amongst the franchise network and in turn fuel customer referrals from one franchise operation to the next.


10. Profitability

When you choose to franchise your business the first thing you will notice is an increase in return of your investment. A franchisor’s profits are generated on much lower capital investment, and although the revenue received from the franchised units is less than that from independently owned business outlets, a higher percentage of that revenue is profit.

As you can see franchising can be an effective and highly rewarding way to expand your business. As a prospective franchisor, you must be aware that not all business people are cut out for franchise expansion. It will take hard work, perseverance, time and money to develop the franchise network and you must be prepared for this.

However, with so much guidance and help available from relevant franchise associations and organisations; franchise portals and franchise business, financial and legal consultants, you will make the transition from business owned to franchise network successfully.

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