Why Franchising Is A Better Way To Expand Your Business

When entrepreneurs want to grow their businesses in a rapid and strategic way, they should consider utilizing one of the corporate world’s most successful models: franchising. According to Rick Robinson, founder and president of Services4Franchising, the industry’s strong track record helps owners take their concept to the next level.

“While franchising gives entrepreneurs a unique opportunity to own their own business with the support of a proven system in place, the industry’s advantages are even more significant for franchisors,” said Robinson.

1851 Franchise recently spoke to Robinson to get more information on the 15 reasons why owners should franchise their businesses:

Financial benefits

Capital

Franchisors have the ability to expand their business without personally taking on any of the financial burden. Since franchisees use their own capital to launch their own local units, franchisors have virtually no investment at the unit level. That means they can leverage the assets that their local owners bring to the table instead.

Return on Investment

Because franchisors aren’t putting down their own money upfront, they have the opportunity to experience a significantly higher return on their investment. Franchise brands make the majority of their money from long term royalties, which ultimately provide a strong incentive to help ensure that local franchisees are successful.

Risk Reduction

Since franchisors don’t have personal capital invested in individual units, their financial risk is greatly reduced. Their risk is also lower than it would be in other business ownership models because they aren’t responsible for managing the team of local staff members and employees.

Limited Contingent Liability

Franchisors also distance themselves from the responsibilities that come along with signing a lease or taking on financing, allowing them to expand their businesses with limited contingent liabilities. That means they have the flexibility and freedom to grow to new locations without worrying about the performance of separate units.

Growth and operations

Speed of Growth

When non-franchised businesses want to expand across the county, they have to save money for years in order to hire employees, create marketing campaigns and secure real estate. But when businesses decide to franchise, they’re able to leverage the time and efforts that their local owners put in, enabling them to grow at a much faster rate. Franchising gives entrepreneurs to open dozens of locations in one year, which can’t be done by businesses going it alone.

Reduced Role in Day-to-Day Operations

Franchisors’ primary concern is how well their franchisees are performing, which ultimately reduces the scope of their involvement in day-to-day business operations. Instead of micromanaging local activities, franchisors operate as a corporate support team for bigger picture services like marketing and customer service.

Reduces Vicarious Liability

At the end of the day, franchisees are responsible for the acts of their employees—not franchisors. That means potential problems like work violations and staff members being injured on the job are all handled by local business owners.

Highly Motivated Management

The franchising industry typically attracts highly motivated managers who take care of their units better than a corporate paid employee. Those on-site staff members who seek out a management roles have more at stake if their unit isn’t performing well, instilling in them a drive to succeed that can’t be manufactured anywhere else.

Quality Control

Franchisees typically keep their locations in better operational shape than other unit managers. Small business owners are also integral parts of their communities, allowing them to promote their businesses on a local level that corporate brands wouldn’t otherwise reach.

Long term advantages

Long-Term Management

Entrepreneurs make a significant investment when they make the decision to become a franchisee, which indicates that they aren’t likely to part ways with the brand—at least in the new future. That long term commitment gives franchisors the opportunity to invest in quality training and support programs for its local owners.

Unit Performance

Franchise-owned locations have a history of outperforming company-owned units. When local owners and employees are personally invested in the brand, it gives them a competitive advantage.

Lean Structure

By using the proven franchise model, franchisors have the ability to grow their organizations without hiring too many employees. Brands don’t have to add members to their corporate team in order to see rapid growth—instead they have the opportunity to recruit more local franchisees who will ultimately determine how many staff members they want to bring into their individual units.

Brand Building

This ability that franchisors have to grow their organizations without substantial overhead additions allows brands to grow their business more quickly and effectively. When franchises are popping up in new communities, it creates a heightened level of brand awareness and recognition.

Advertising

Franchisees often contribute to a common advertising and promotional fund that’s then used to market the brand as a whole. Franchisors ultimately control the direction of those advertising efforts, enabling them to better position the brand to the public than if they were entirely responsible for funding media campaigns.

International

After franchisors have built a strong network of local franchisees, international expansion becomes easier, faster and less risky. Having an already established brand opens the door to master franchisees in new countries.

At Services4Franchising, Robinson has successfully helped numerous businesses in different industries expand through franchising, as well as helping more than 800 people find their business opportunity. He’s happy to assist and advise anyone who is considering franchising, but may be unsure of the best path to take. If you would like a free consultation to discuss the viability of franchising your business, you may contact Robinson at [email protected].