No doubt franchising can be a powerful way for you to expand your business into other markets. If you want to grow your business but may be limited in resources, franchising can be very enticing. While the idea of franchising might have been a blip on your radar at one time, you may not be aware of some of the major benefits of franchising. Let’s explore just a few of these benefits now and we encourage you to watch the video at the top of your screen.
Quick Expansion
When you franchise your business the opportunity to grow quicker than you could on your own becomes a reality since the costs associated to open each location will fall on the shoulders of the person who buys into your franchise (the franchisee). Perhaps you are trying to grow on your own and running into some of the challenges we hear such as: employees quit and become your competitors or maybe you’ve been trying to manage people remotely, all of which can be frustrating. On the other hand, franchisees have a vested interest in the success of the business they open opposed to you hiring a manager to run your business (who like any other employee, most likely will not care much about the business or its success). Not to mention franchisees are responsible for the daily operation of their business which includes hiring, training and managing employees (this is a big one). That’s right, you no longer have to worry about managing people or being financially responsible for the business being operated by these franchisees. Then the fun really begins because as franchisees slowly begin to operate your business in other states, cities and towns; eventually your business name becomes recognizable and yep you guessed it, branding begins to take form.
Grow and Save Money
Money is always a hot topic. There are a few ways for you to save money when franchising that you would not otherwise be able to do if you attempted to grow on your own. One way, often overlooked, is being able to avoid the impact of health insurance requirements and taxes. Currently under the Affordable Health Care Act if you employ fifty or more people you are required to provide health insurance. But in franchising that requirement disappears because each franchise business is independently owned and operated (read “The Benefits of Franchising and The Affordable Health Care Act“). Bottom line is you are not an employer of the franchisee or its employees. Second most important is that all revenues generated by your franchisees are taxed to the franchisee not on you thus saving you some major tax dollars. These two examples can be a HUGE savings for you compared to attempting to grow (open more locations) on your own.
Train and Mentor Motivated Entrepreneurs
Looking beyond the ability to expand quickly into other markets while saving money, there are a few other key benefits to franchising. Here is one you may not have thought about: franchising is an opportunity for you to train and mentor other motivated entrepreneurs into their own business (see “Franchising a Business Means” for more on this topic). And in some cases, depending on your type of business, once it gets out in the marketplace, it may have the potential of changing lives. Now that is powerful!
We have pointed out just a few of the many benefits when it comes to franchising, but we want to point out one more. Not only are franchisees taking on the risk to operate their own business; but if you create an open and encouraging franchise culture then it is not unusual that improvements to your business model are discovered by none other than your franchisees. Often times such discoveries are welcomed and embraced by you (if realistic) and then implemented by you throughout the entire system. Great suggestions for improvements that may have to do with operations, customer service or perhaps an idea for a new service could result in substantial grow is not uncommon when you have a group of enthusiastic franchisees running operations. The best part is that ALL such discoveries (new strategies, techniques, methods, materials, etc.) become your property. Dave, our President, has witnessed some of the most amazing growth in franchise systems that embody this philosophy (find out more about us, Dave and the birth of The Franchise Maker).
Yes, while franchising can help you start your own chain business and the benefits of franchising are numerous; there are some rules you have to follow. Franchising is regulated by the Federal Trade Commission all in an effort to protect the consumer (in this case the franchisee) and keep you (the franchisor) honest. While franchising does require a specific framework and can be complicated, you can learn how we make the steps to franchise easy. Call us directly at 1-877-615-5177 and we will be happy to answer all your burning questions and even answer the questions you do not ask!
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- How to Franchise: Everything You Need to Know
