Why Franchise?
Some of the best-known brands use a franchise model as
their means of expansion, with great success. But it’s not just about the
well-known catering giants; franchising today is extremely diverse, encompasses
a multitude of business types and consumer markets and is well-established as a
successful and highly-regarded growth model.
So if your business is proven, profitable, transferrable across different geographic areas and teachable to an outsider, you really should be considering franchising if you’re looking to expand.
Why? Here are some of the advantages of franchising:
So if your business is proven, profitable, transferrable across different geographic areas and teachable to an outsider, you really should be considering franchising if you’re looking to expand.
Why? Here are some of the advantages of franchising:
More cost-effective growth
Your brand benefits from the capital investment and resources of others (your franchisees) so you require less capital than taking on more stores and more staff yourself. Fees are paid by franchisees to join the network (covering the cost of training them and establishing them in your systems) and then on an ongoing, monthly basis.
Quicker growth
Once you have the right systems and infrastructure in place, your franchise can expand at a quick rate. If you invest the time, capital and work into getting your model right from the beginning, then the only limitations on your expansion rate are the ability to recruit, train and fully support your franchisees.
Better results per outlet
A network of owner-operators gives you a more robust business compared to simply installing managers. Franchisees are far more motivated and have a significant vested interest (financial, time and emotional) in the success of their business, and consequently your brand, which grows through a network of ambassadors with as much interest in you as making it the best it can be.
Some of the UK’s biggest brands have reported a 30% upturn in store revenue when a company-owned outlet is converted to a franchised one.
Economies of scale
A franchise network can quickly start to take advantage of bulk buying power, reducing your production costs for example and/or increasing your profit margins, and those of your franchisees.
Easier management
A franchise network requires sufficient staff to support and oversee it, but far, far less than a similarly-sized company-owned operation would require to function. Franchisees take on all the responsibilities for individual outlet staff recruitment and training, accounts etc.
Strength in depth
Many franchisors, particularly when they are starting out, encourage franchisees to contribute ideas for the future success of the brand. You’re all working towards the same goals, and the synergy in the relationship can be incredibly powerful; sometimes the views and experiences of others coming into your network creates new routes to success. The Big Mac was invented by a franchisee, and that’s been fairly beneficial to McDonald’s...
In addition, franchisees being able to lean on each other for advice and as a sounding board leads to growth and more profit for all concerned. Being a business owner can be isolating at times and knowing there are others around to call on, as well as a head office support team, is reassuring. It’s no surprise that national franchise conferences are extremely well attended by most networks, and lead to a lot of knowledge-sharing across the business.
Sounds good? One important thing to remember: franchising is not a tool to fix a bad business; it is not there to provide injections of income from other people to underpin a failing elsewhere, which will only create a larger bad business.
It also requires significant financial investment and time at the outset to get the model set up correctly for future growth.
Franchising is a model used to replicate a successful and proven business, using the investment and skills of new individual business owners, who will be trained and supported to run the business under the agreement, conditions and format, as proven and agreed between both parties.
Get it right and you could have the next UK-wide success story – or even a global empire!
