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What are the advantages of using the franchise model to do so?

Franchising an established business can be an excellent way to break into new markets and expand. Advantages include:

  • Franchisees will usually pay a franchise fee, royalties and other amounts and such income will help to improve cash flow and expand your network quickly in a way that your business may not have been able to achieve alone - in effect, expanding your network without using your own capital to do so.
  • Operating a franchise network can allow your business to secure new distribution channels in new locations faster than it could have done so by internal growth.
  • Your purchasing power may increase, as you may be able to negotiate better deals for goods and services by buying in bulk on behalf of the whole franchise network.
  • You can decide who you accept as new franchisees and impose strict controls as to how the businesses are run to ensure consistency across the network.

While there are a number of advantages to franchising a business, you should also consider the downsides of using the franchise model before making your decision. You will need the capital at the outset to recruit, train and support franchisees and you will also have to divulge substantial know how and information concerning your business.With the above factors in mind, you should consider carefully whether franchising is appropriate given the nature of your business and ensure you are prepared for the additional commitments running a franchise network entails.

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