Who Really Benefits from Franchising?

For business owners who decide to become franchisors, franchising can result in the widespread establishment of name and brand recognition, tremendously improved market penetration, more effective and efficient operation, and innovative new profit opportunities.

More importantly, for many franchisors this proven business system is the perfect solution to three of the most common business expansion problems: time, money, and personnel.

Time

By allowing businesses to expand exponentially simply by replicating one new franchise unit after another, franchising is the best answer to overcoming slow growth/limited window of opportunity issues. Best of all, the size and speed of overall business growth can be almost unlimited.

Money

Because franchisees assume almost all of the cost, as well as most of the risk, for each individual unit including rent, construction, inventory, employee wages and initial working capital, franchising can help avoid the difficulty of securing outside financing for expansion needs. In addition, as the parent company expands, its buying power can dramatically increase resulting in significantly reduced costs for products, services and supplies. The result can be a significantly more profitable parent company with thriving franchisees.

Personnel

Franchisors don't have to worry about many common employee issues because it is the franchisee's responsibility to hire, train, supervise and pay all employees. In addition, franchisees often make the very best managers because they have a strong personal vested interest in the profitability of their franchises. This means that because franchisors have less management and daily administrative problems to worry about, they are now free to focus on more important concerns in order to improve overall company efficiency and profitability.

For franchisees, finding the right franchise can quickly produce a dynamic new business that brings to the table a proven, predictable product or service backed by experienced support staff and a proven business system that helps maximize an entrepreneur's chances for success.

Because franchising minimizes a new entrepreneur's learning curve, he or she can get their business up and running to profitable operation much more quickly. In addition, the overall cost is similar to that of developing an independently owned business lacking any established positive identity with consumers, advantageous buying power or well-established operating procedures.

For consumers, franchising provides very familiar products and necessary professional services that can be purchased with complete confidence, as customers know beforehand exactly what kind of experience to expect based on past franchise performance, advertising message and positive community reputation. Clearly, franchising can be a win-win-win scenario for everyone involved when it is done properly, efficiently and competitively.