Why Franchising is the Right Way to Expand Your Business
If you are looking to grow your business, you may have thought to yourself: how to franchise my business, is my business ready to franchise, and whether it might be the right model for you. If you are not quite sold on franchising, or donโt know why many business owners choose to franchise over other models of business expansion, this article is for you. More than 710,000 people in the UK work for franchised businesses – and this number continues to grow. Expanding through franchising can bring many benefits for you and your business. In this article, we look at the key reasons you should choose franchising to grow your brand and your business.
Franchises are more stable during a recession
No industry is immune to the challenges presented by a recession. However, franchised businesses are more recession-proof than those which run independently. Franchisors donโt have the same debts and overheads as other business owners, and each franchisee can work hard to keep their franchise afloat.
Franchising allows you to expand quickly
Franchising allows you to set up your business in a number of locations quickly, as your franchisees will be doing much of the work and providing the financial investment. Franchisees are also highly motivated to get their franchise off the ground quickly, so it can start making money. You will not have much upfront cost for each franchise location, as the franchisee’s franchise fee will cover set-up costs and equipment.
Franchising is a cost-effective method of expansion
As discussed above, the cost of setting up a new location is largely covered by the franchisee. Your franchisees will pay a franchise fee, and then will pay you a percentage of the profit they make from operating under your brand. As a result, the costs of operating this model are limited. Once the franchise is up and running, your franchisee provides you with a monthly income from the operation. However, the key to operating a successful franchise is to create an attractive opportunity and support for franchisees. They must be motivated to make their venture successful, and have the tools and support to do so.
Increased purchasing power
The most important part of a successful franchise is enabling franchisees to replicate your successful business operation. When you invest in nationwide marketing, you can expect the brand to be able to expand successfully all over the country. When your sales volume increases, you can benefit from stronger purchasing power. Increased purchasing power may allow you to reduce your overheads significantly, with excellent discounts from suppliers.
Franchising can help you to break into the market
One of the key selling points of each of your franchise locations will be the franchisee in that area. The franchisee may be well-known locally, or at least have great knowledge of the location. Perhaps they have been a previous business owner in the area and are known within their community. Local franchisees have increased power to attract new customers and a better understanding of what those customers want.
Also check out: how do you franchise a new business
Franchising means less work for you
The day-to-day running of your franchise locations will be carried out by your franchisees and their team members. As a result, you will have more time and headspace to work on developing the business and the brand as a whole. Your franchisees will take care of hiring staff and dealing with any issue that arises in their franchise location. However, it is still important that you provide support and direction for your franchisees. They will need adequate training as well as access to support systems to allow them to grow and manage their business. But, having a team of capable franchisees takes much of the stress out of running a network of business locations.
You will not have to recruit as regularly
You will, of course, need to recruit franchisees to take on new locations. However, when a franchisee makes an investment in your business, they are likely to stay with you for some time. Typically franchise agreements are for five years, but even where they decide they wish to leave the business early they may not do so because of the work they have put in and the amount of money they have invested. In short, they are more likely to stick out tough times. In addition, franchisees are very careful about choosing a franchise, so it is likely they will be a good fit for your business, understand what is involved in the role and do all they can to make the business work.
Where a franchisee decides it is time to move on, as per the franchise agreement it will normally be their responsibility to find a suitable buyer for their franchise location. As a result, you wonโt have to go through the often burdensome task of finding a new franchisee.
Franchisees also hire their own staff members, freeing up your time and energy to focus on other matters.
To find out more about how to franchise your business, take a look around the IBGN Franchise Consultants website.
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