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The Benefits of
Franchising Your Business
When you convert your current business into a franchise business
model, you are entering into a commitment to work hand-in-hand with
other entrepreneurs who will place their trust in you, investing their
hard-earned capital as new franchisees for your business concept.
While the thought of franchising a business can be intimidating, it
also offers a number of opportunities and benefits. Here are some of
them:
Financial
Benefits of your "Star Idea"
The initial Franchise Fee and subsequent royalties flow will be the
first of many financial benefits. The "star idea" that spawns most
franchise business concepts will typically allow profitability from
strong trademarked brands, diversified product lines, licensed
products and industry-specific opportunities. The franchisor is in
control of what can be offered to its market, as well as the methods,
processes or systems.
An Opportunity
for Accelerated Growth
By combining brand positioning, regional marketing campaigns, and
established resources, franchisees can grow their businesses using
their franchisor's knowledge. At the same time, franchisors can manage
growth by utilizing pre-established marketing or advertising fees
based on their franchisees' revenues.
Legal
Protection of Intellectual Property
Intellectual Property ranges from the trademarked name, colors and
symbols to a patented system or recipe. Trade secrets such as
proprietary methods, techniques and certain types of processes can be
protected under franchising agreements to prevent the unauthorized
operation, competition or reproduction of a particular product or
service. Franchisors protect their uniqueness to prevent their
unauthorized use while profiting from the sharing of their
closely-guarded proprietary knowledge.
Balanced
Management
While the business concept is centrally managed by the franchisor, the
actual day-to-day business operation is managed at the franchisee
level. This de-centralized management operation responds to the
leadership of an entrepreneur or entrepreneurs whose future and
wellbeing depends on their dedication to their own business unit. Each
side of the franchisor-franchisee relationship has obligations to the
other, creating a balanced management style with specific benefits for
each of them.
Centralized
Marketing for Increased Power
The franchisor controls the marketing, advertising, communications and
public relations operation to protect its brand, trademark and
business concept. Utilizing the Marketing or Advertising Fee
(typically a percentage of the revenue that is collected
periodically), the franchisor will use the cumulative financial power
of its marketing budget to secure advertising that reaches their
target markets.
There is
Strength in Numbers
The concept of Economies of Scale dictates that the increased buying
power of multiple business units can lower the core costs as a result
of bulk purchases. Franchisors will typically establish all resources
during the development of their franchise business model. As a result,
standardized supply procurement and ordering offers the opportunity of
lower costs and in some cases franchisors will establish Distribution
Centers to manage their supply chain and reduce inventory at the
franchisee's business location.
Lower Fixed
and Variable Costs
Costs can be fixed (buildings, company vehicles) or variable
(supplies, employees) and in a franchise business model it is easier
to manage them due to the combined financial power of multiple units
and the economies of scale of the entire operation.
Fair and
Balanced Risk
In a franchising growth strategy, a lower capital investment by a
franchisor is justified because franchisees take on the financial
burden of the business' expansion by purchasing a franchise unit . As
a result, the balance of risk is shifted to the franchisee's side,
allowing the franchisor to concentrate in the development of the
business, not its growth risk.
There are many more benefits associated with a franchising business
model. Contact us
today to learn more about what franchising can do for you and your
business. |
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Fringe Benefits |
Some of the reasons
why you went into business for yourself
in the first place... |
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Financial Independence |
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Personal Freedom |
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Control over your
Future |
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You should always
remember that any business you set forth
to manage will require dedication, hard work, and perseverance.
Owning a franchise is a commitment to yourself as well as to all
your franchisees who have placed their trust and finances in your
own dreams and goals.
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