Should You Franchise Your Business?
Apr 20, 2012
Franchising can be a powerful method of expansion for a growing business. Once you have experienced success with your brand and are considering of ways to distribute your products and services on a wider scale, one of the most important considerations will be whether your business can be replicated. If you can distill the essence of your brand and business operations into an easy-to-follow formula and set of standards, franchising may be the next logical step for you.
Growing your business through franchising can be an attractive option since it ultimately requires less capital investment over time than opening each new location as a corporate-owned business. Franchisees finance their business and, as a result, you will have fewer employees within your corporate network. This is not to say that personnel management is easier under a franchise model, but it is a factor to consider.
Franchising may be an ideal method for expansion into different jurisdictions once you find a partner, or partners, you can trust with your brand. Compliance with local laws and regulations will be the franchisee’s responsibility, and business can grow exponentially faster when you can license several people the right to operate your franchise at the same time in different locations, rather than trying to manage it all yourself.
And there’s strength in numbers. A larger franchise network can lead to better purchasing power from suppliers, and may lead to more ideal locations as landlords may prefer to deal with an established brand.
Of course, one of the biggest challenges for a new franchisor will be surrendering a large degree of control over the brand to a franchisee and trusting them to maintain the reputation and standards which you have invested so much time, money and energy into developing.
Franchising may not suit every business, but the benefits are self-evident in today’s marketplace.