What is Franchising?
Franchising is a growth opportunity for business owners which is availed by selling the rights to open another branch or unit of their business, following the same business model and structure, to another party. In a franchise arrangement, the buyer pays the business-owner a percentage of the sales after opening a replica of the franchise business under the direction of the franchisor. This benefits the franchisee by operating a well-established brand name with a fixed business structure while the franchisor benefits from the sales and expansion of his brand.
How to Grow your Franchise Business?
If you are considering to grow your business by franchising, here’s how to get started:
Expand your “parent branch”- Before you attempt to open a franchise outside your immediate area, develop your share in the market you are currently in. Before reaching out to new horizons, grow your home base first.
Perfect your business model- Conduct a market research to find any potholes in your business structure. Fix the issues which might be an obstacle in your progress.
Build a positive reputation- Franchises survive on a good reputation so make sure that your business has a positive one.
What are the benefits of franchising?
Franchising opens new doors of opportunities for a business mainly if you think it’s time for expanding but do not have the resources to implement growth strategies. There are many benefits associated with franchising your business, following are a few reasons why you should franchise your business:
Expansion without capital
Franchising allows you to broaden your horizons without the risk of a debt or at the cost of equity as the initial investment is provided by the franchisee.
If you decide to open up another location to your business, the time involved in hunting for an appropriate place and to set it up from scratch, limits your progress. Franchising is a complete time-saver if you wish to propel as the growth tasks are handled by the franchisee.
Less burden on your back
Appointing a trust-worthy unit manager to handle your operations at your new desired location is a tedious task. With a franchise arrangement, you do not have to worry about that, as it is the franchisee’s responsibility to handle all operations since his investment is at stake.
Better market reach
Franchising enables your business to penetrate markets over a wide area without having to worry about other issues such as, money, managers, operational demands etc.
Since a business pattern is already established and an operational process is being followed, the franchise will be able to generate profits almost instantly when put into action benefiting you with the profit margin.
At the end of the day, it is your brand which is doing well even if the franchisee unit turns out be a more profitable one. Having a stake in the outcome of the operation, being rewarded with marginal income and simultaneously strengthening your brand image are all perks of being a franchisor.