Question: Why would anyone want to franchise a business?
Answer: Personal and professional financial security and self-actualization. Also, franchising a business will enrich the economy and the lives of everyone who comes in contact with the franchised business.
There are two basic choices in business development:
- To remain a small informal company; or
- To expand into a large profitable local, regional, national, and international organization. When you desire wealth and power there is only one choice; to build a commercial business dynasty.
Franchising: The Best Way To Expand A Business
Expanding a business can be accomplished through opening additional company-owned operations or through franchising. Franchising is far superior to opening additional company-owned stores and ultimately more profitable. Franchising is the best way to expand a business.
Problems With Expansion Through Company Ownership Non-Franchise Operations
- Significant capital is required.
- Large overhead.
- Borrowed capital utilized must be repaid.
- Large time & expense requirements.
- Management problems related to the span of control, supervision demands, and difficulty in hiring and maintaining competent managers.
Positive Points With Expansion Through Franchising Business Operations
- Limited capital requirements.
- Limited overhead.
- Limited time requirements.
- Sufficient capital generated to sustain growth.
- Franchisee’s capital does not have to be repaid.
- Improved opportunities for future financing.
- Improved financial condition of the company.
- Enhanced corporate image, company prestige, and visibility.
- Diversification and increased liquidity and personal wealth.
- Management of operations through franchisees.
- Franchisee is responsible for day-to-day management.
- Rapid growth.
Advantages & Benefits Of Being A Franchisor
The advantages and benefits of being a franchisor company outweigh many other business growth strategies. The list of advantages and benefits are phenomenal.
- The ability to thoroughly leverage others’ assets. You can use the money, time, talents, contacts, ideas, and resources of others to expand.
- You can sell the business and still own it. And you can sell it over and over again.
- Immediate cash flow.
- No contingent liability.
- No additional real property or equipment leases.
- No manager or personnel procurement problems.
- Eliminates the day-to-day responsibility for direct management.
- Franchisor’s income is based on the franchisee’s gross sales, not profitability.
- Gross sales are easier to monitor than profits.
- Profit and loss responsibility belong to the franchisee.
- There is a long-term residual income.
- Expansion is not limited to your capital because the franchisees provide the capital for expansion.
- Collective buying power.
- More capital can be generated for advertising.
- Franchise fees can be used for research and development of new products and services for the franchise network.
- Cash flow from franchise fees can be used to open company-owned franchises.
- The capital generated through franchising does not have to be repaid and can be used to sustain growth.
- A franchisor helps other ambitious individuals to succeed in their businesses.
- A franchisor company can be operated with a minimal number of employees since each franchise operation is staffed by employees of the franchise.
Franchising is the best-leveraged business growth system ever created!
The reason wealth can be made so swiftly is that franchising is the best business growth method ever created. Franchising offers an abundance of essential leverage ingredients which many business opportunities lack. The time to create franchisor companies both nationally and internationally has never been better.