The Benefits of Franchising
Franchising is a tried and tested business growth strategy that has enabled many entrepreneurs to build wide-scale networks of local ‘branches’ or ‘outlets’ more quickly and more profitably than by other means. The actual benefits of franchising vary from business to business depending on things like the type of business, the market and the company’s reasons for franchising. Generally speaking the benefits include…
- The business can expand with less capital (and therefore more quickly) than with the traditional route of opening company-owned ‘branches’, since the start-up costs of opening in each new area are met by the franchisees.
- Franchised branches, outlets or areas generally perform better than company-owned ‘branches’, because franchisees, with their own capital invested in the business, are more committed to its success than employed branch managers.
- Branches, outlets or areas that are geographically remote from head office are less troublesome to control when franchised, again because of the vested interest of the franchisee in the success of that outlet/area.
- Via the franchise agreement the franchisor can exercise a much higher degree of control over franchisees’ activities and the service delivered locally than with, say, distributors or agents.
- The day-to-day running of the individual branches/outlets (local operations, payroll, staff management, admin, book-keeping, etc.) is the responsibility of the franchisees, and therefore...
- The resources needed to build and support a franchise operation are generally less than a company-managed network.
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