Why Franchise?

Outsource Management

Franchisees are themselves responsible for the day-to-day running of their business units and they must do this strictly in accordance with the Franchise Agreement. As franchisees must invest their own capital, it is not necessary to micromanage them as you might with employees.

Faster Expansion

The benefit of franchising usually means that franchised networks can be expanded more quickly than corporate chains. To start a chain of businesses you would need to save up enough capital to purchase each business unit one at a time.

Franchising is all about replicating a clear and successful business formula and, provided the franchisor is prepared to make a reasonable investment in marketing at the national level, the brand can quickly be expanded nationwide.

This will in turn generate increased sales volumes and stronger purchasing power, via which the organization can command greater discounts from its suppliers (economies of scale).

Better Market Penetration

Franchisees are normally well established as part of the local community, either on a personal level or as a result of their past business activities. This can give them a very significant advantage in gaining new business for the franchise at a local level. They will generally live within the franchise territory, be known there and will be seen as having made a permanent commitment.

These are all attributes which generally do not apply to company employees and will be of enormous value in helping franchisees to penetrate their local market.

Greater Commitment

Franchisees have invested in their business and know that they can benefit directly from its success. Logically, for that reason, their commitment will be much greater than that of employees, who have made no such financial investment and are guaranteed to receive at least a basic wage at the end of each month, regardless of performance.

However, money is not the only driving force for better performance. Since the business is their own, franchisees will take real pride in the service which they provide and will ceaselessly strive to exceed the expectations of their customers.

This commitment will also reflect in their loyalty to the franchisor’s brand, because it is also the franchisee’s brand, and they are intent on building up a business which can be sold on for profit at some future date.

Of course, not all potential franchisees are so strongly motivated – nor do all have the necessary ability to succeed – so the franchisor’s initial selection process must be rigorous.

Less Recruitment

On purchasing their franchise, the franchisees are really taking a decision to stick with their chosen business for the long term. If they leave prematurely they are unlikely to realize the full potential of  their franchise investment and they may possibly lose everything.

Even when the time is right to sell, it is their own responsibility to find a suitable buyer. This means that the franchising organization is generally freed from the time-consuming and tedious task of continually recruiting and re-recruiting managers for its business units.

As for recruitment of staff within the franchises themselves, the responsibility for this task clearly rests with the franchisee, not the franchisor.

Reduced Costs

Unlike employees, franchisees make an initial payment in return for becoming a part of your business and then they continue to pay you a percentage of their revenue, throughout the duration of their Franchise Agreement.

This means that the costs of setting up the franchise, training staff and launching the business are all covered by the franchisee rather than by the parent organization.

Similarly, once the business is up and running, it is the franchisee that will be rewarding you with a monthly income, rather than being paid by you as an employee. For these reasons, the franchise system can provide a very cost-effective route for business development, but only provided that the original business is successful and that the franchisor is willing to invest sufficient time and money into creating an attractive franchise opportunity.

International Potential

Using a system called Master Franchising, you can quickly and simply replicate the whole of the your UK franchise model in another country, leaving the Master Franchisee to adapt the model to the local market – its language, business customs and legal requirements.

This is a very effective method of expanding a business overseas without any need to create subsidiary companies or branches in your chosen countries.

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