What does it mean Franchise Your Business?
Franchising is a business model where a parent company allows other people to operate franchises which offer the same quality of service and which follow similar procedures regardless of their local or international locations. There are many factors that benefit not only the parent company but the franchisee as well.
6 Benefits when you Franchise Your Business:
1. Lower Cost
Franchisees pay you a certain amount of money before becoming part of the business and they will continue paying you a certain percentage of their revenue for the entire period of the franchise agreement. This means that you don’t have to pay for the cost of setting up the business and training staff. For these reasons, franchising provides the parent organization with an excellent way of running a business in a cost effective manner.
2. Simpler Management
When you franchise your business, franchisees take responsibility for everyday running of the franchised business units. They will do this accordance to the operating manual and the franchise agreement you set up. The goals of the franchising organization and the franchisee are dependent on the success of the other. This simpler management structure translates to lower costs for the business. This is indeed based on close monitoring provided by the franchisor of the performance indicators and the provision of good leadership.
3. Faster Expansion
Because franchisees finance themselves, the network of the parent company can be expanded quickly. Unlike when the expansion network is run by the company itself. Franchising is a model of the successful commercial idea and formula provided by the parent company. The brand can potentially be expanded nationwide and, therefore generate a large sales volume.
4. Better Market-Penetration
It helps to franchise your business and build a network of communities. As result, they become well known and a “usual” so to speak. The closeness with the community also makes it easier for the franchised businesses to gain customers in other locations. These business units are loved by the locals. In turn, building a long term relationship with valued customers.
5. Greater Commitment
Franchisees put their money in certain types of businesses which they know they will benefit from. Because of this, their commitment to the business is much greater than that of an employee who makes a minimal investment. Which is usually enough for them to receive basic wage at the end of the month. Because they own the business, franchisees take pride and work tirelessly to provide their customers with a good quality of service. The investors also strive to build the business because they it benefits them financially.
6. International Potential
Franchising is great for a businesses that would want to expand to international destinations. By using a master franchising system, business owners can replicate the success which has been achieved by the parent company in other locations. This is a good method of expanding a business to overseas locations without creating subsidiary companies.