Why does a brand decide to franchise its concept?
Louise Harris writes:
Franchising a business is not always the right or easiest route to expansion - but done well it can be a win-win for all parties.
If national or international roll-out of a brand is relevant, the values and standards of that brand will need to be replicated through dedicated individuals. Having financial ownership of the work you’re doing makes a more compelling driver to uphold standards - in short, franchisees work harder and for better rewards than an employee might since they’re reaping more of the financial benefit.
If a business is replicable and teachable, then franchising is frequently the best method of expansion since it also reduces the capital outlay for the business - the franchisee will fund their own business requirements (property, vehicles, equipment, etc) and in return reap the rewards for that, giving a percentage to the franchisor.
It may also be a quicker way to expand than doing so conventionally. It should be possible to open a number of units at a time using the same HQ resources and optimises training and development time.
There may be other reasons why a business franchises - such as logistical or geographical challenges - and it’s a question would-be franchisees should ask of their prospective franchisor, so they understand some of the driving factors.
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