The Desire for Growth
There are times when the best way to GROW a business is to add a new location or two. And IF money isn’t an issue, then opening additional company-owned locations would be the best method of expansion for most businesses. But it can get really expensive! The cost to cover leasing, furnishing, staffing, training and marketing for other locations is far more than the average business owner can afford! Nonetheless, when money is an issue for a business owner, who has a burning desire and demand to grow into other markets, opening up additional company-owned locations is just not an option.
Franchising may be the most affordable and effective option for growth. The costs associated with opening new locations are funded by the new franchisees. The business owner (Franchisor), in essence, has leveraged the growth of their business into other markets through the time and resources of franchisees. While there are costs to supporting franchisees during their startup and beyond, it is far less by comparison then the cost of opening multiple company-owned locations.
Branding and Leadership
Consider the cost of BRAND awareness. How much money is spent marketing a brand? Yet, just by stepping into the role of a Franchisor, a business stands toe-to-toe with well-known franchise businesses and may soon become a household name. When a business owner starts franchising, is it not unusual to hear customers say, “Wow! You must be successful!” Businesses that expand through franchising have the best of both worlds: they can experience rapid growth and still maintain the uniqueness of the services and/or products that have made them successful. As franchisees come onboard, the Franchisor is the mentor. Franchisees are in business for themselves, but NOT left alone by themselves. Branding services and product consistency is controlled by the Franchisor.
Franchising will generate revenue a few different ways such as:
- Franchise fees are collected to compensate for training the new franchisee and all the items provided to them for a smooth entry into the business;
- Royalties are collected to support ongoing training, brand consistency, ongoing advertising and marketing initiative, product development and other such support; and
- There may be products that Franchisees are required to purchase and in many cases the Franchisor is the supplier.
Give yourself time to research what kind of expansion is right for your business!