Nowadays, business owners are searching for ways to expand, grow their existing brand awareness, and of course, up those profit levels. This leads many owners to consider franchising as a growth option but wonders how, exactly, it might help.
TIP: However, if your business is not currently in a great position, franchising may not lead to the results you’re hoping for.
Before we dive into how franchising can grow your business…
What is a Franchise?
Depending on the terms of the franchiser/franchisee agreement, the business owner is often paid for the use of the successful business’s trademarks, products, methods of operation, and likeness of a storefront in exchange for support and training to get the business up and running.
While national, province, or state requirements can vary, a franchise can help to boost the original store’s profits as well as its own.
NOTE: Be sure to consult a franchise legal expert to discuss your options, regional regulations, laws, and fees to ensure it’s done correctly to avoid personal and professional risk to the original location.
Benefits of Franchising Your Business
There are always downsides to every business decision, owners must weigh out this decision before jumping into offering franchises to area entrepreneurs. Let’s tackle some of the benefits and how franchising can help your business if it’s currently successful in its operations.
Expansion Without the Need for Excessive Capital
All capital including site procurement, investor marketing, franchise fees, and the time to research and hire qualified management is integral to the successful start-up of a franchise, however, the original owner doesn’t need to front the money. The franchisee is responsible for all costs incurred with building the new location – sometimes front the ground up.
Motivated Entrepreneurs Accelerate Growth
Qualified and motivated investors looking to franchise your establishment want to see it succeed – since their funding is on the line. They are determined to turn a profit which is a perfect recipe for growth both at the franchised and original locations.
Reduce Expansion Risk
While the franchised location operates the same, offers the same products, and even looks the same, the original owner assumes no financial risk so if the new location does not do well, the investment does not harm the bottom line of the original owner.
You’ve already demonstrated that the concept works well, and they’ll be inspired to ensure their location is just as successful – and they’re in it for the long term.
Boosted Brand Awareness
Obviously, with more locations and more passersby, the awareness of your branding grows exponentially, and with satisfied customers across many regions, the potential for growth skyrockets both your location and those of your franchisees.
Increased Net Profit
Some franchise terms and conditions require the franchisee to pay the original owner a portion of the proceeds. The built-in credibility of the brand is partially what brings in business for the new location and franchisers may be compensated but without having to operate an entirely separate location.
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