Many entrepreneurs think that franchising is a costly affair and it is not meant for small businesses. Do you think in the same way? Then, you should change your concept because it is far from the reality. Franchising helps a business to grow rapidly. In this article, we will be focusing on seven steps that can help your business reap benefits from franchising.
1. Capital
Capital is the base of any business. Sometimes, it is the only obstacle for the small businesses. Sometimes, the growth goals of the companies outstrip their ability of funding. Franchising is an alternative backup of capital acquisition. It offers some sound benefits. One of these benefits is the fact that franchising allows the businesses to expand without the fear of debt or the cost of equity. Whenever you are thinking “how to franchise my business”, you must consider the financial issues. You should not forget that financial support is the most desired thing for a small business.
2. Speed of Growth
Every business owner is scared of the fact if someone else beats him with his own concept. This fear has valid grounds. Opening a single unit takes time. Many entrepreneurs have realized that franchising is the only way of gaining the position of the market leader before the opponents encroach on their space as the franchisees look after most of these responsibilities. Franchising enables an organization to compete with the larger companies so that they can saturate the market before the bigwigs can respond.
3. Staffing Leverage
Staffing leverage is an issue that compels you to think, “I should franchise my business”. Franchising enables the franchisors to operate effectively even with a leaner organization. The franchisees will deal with many of the responsibilities that otherwise would be shouldered by your corporate home office. Franchising your business will reduce your staffing responsibilities and you will be able to focus on other important issues related to the growth and development of your business.
4. Ease of Supervision
If you think from a marginal perspective, you will be able to find out that the franchisees offer a number of benefits. For instance, you will not be responsible for day-to-day affairs of individual franchise units. If a shift leader or one of the crewmembers is calling in sick in the midnight, it is not your call. Your franchisees are responsible for dealing with this. The franchisees will find a replacement or manage the shift. However, these adjustments won’t affect your business and financial returns.
5. Enhanced Profitability
The staffing advantage and flexible supervision enable the franchises to run the business successfully in a profitable manner. As the franchisors can rely on the franchisees to undertake the location selection, lease negotiation, local market, recruitment, payroll, training, and other important functions, your organization will become much leaner. In this way, your organization can gain more profit. Therefore, whenever you are thinking “how to franchise my business”, you should consider the matter of profitability.
6. Energized Valuations
What helps you improve the overall valuation of your business? Many things can help you boost the valuations such as rapid growth, increased profitability, and organizational advantages etc. Once, you have successfully established yourself as a successful franchisor, you will be able to introduce a scalable growth model to reap multiple advantages.
7. Penetration of secondary and Tertiary Markets
The franchisees should be able to enhance the unit-level financial performance that has some heavy implications. A qualified franchisee will generate higher revenues in comparison to a manager in the same locations.
A Final Takeaway
Apart from this, your franchisee will keep track of expenses. In most of the cases, the franchisees have a cost structure that can differ from your cost structure. He or she can operate a unit that is profitable even after accounting for the royalties the franchisee must pay you. It will enable the franchisors like you to consider the markets in which corporate returns are expected to be marginal. Franchisees can operate successfully even in the aggressive markets that might not be high on your priority list.
To explore more about franchising, get in touch with the Franchise Institute.
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