Franchising Provides Expansion Capital
The need for capital to grow is largely eliminated. The franchise fee paid by franchisees will normally cover expenses such as fixtures, signs, rent deposits and other opening expenses. This source of cash from franchisees can reduce or eliminate one of the greatest risks for growth: FINANCIAL LEVERAGE. Instead of borrowing for growth, your franchisees can furnish the capital.
Franchise Operators Are Motivated To Succeed
A few years ago, a chain of doughnut shops switched from operating as a company-owned chain to a franchise chain. In most cases, the company managers stayed on as franchisees. The results of the transition were apparent the very next day. The stores were cleaner, the sales went up, and the donuts were bigger and better. The difference was that instead of managers, the stores were run by proud owners.
Avoids Employee Related Problems
In a company-operated store, the manager and employees are on the company payroll. In a franchised unit, they are employed by franchisees. This relieves the franchisor of the escalating headaches related to employees, workers compensation insurance, and other labor-related issues.
Accelerates Expansion Over A Wide Area
The franchisor is thus free to expand geographically at a rate that eliminates the three big issues of MONEY, MANAGERS, AND EMPLOYEES. Using Internet technology communication tools, international expansion becomes more feasible.
Would You Like Some Free Expert Advice
Schedule a One-Time Franchise Consultation
Our franchise development team is ready to meet with you to evaluate your business and discuss if franchising is right for your organization.