Why should you Franchise?
The primary barrier to expansion is capital. Franchising allows companies to expand without the risk of debt or the cost of equity. Since the franchisee provides the initial investment at the unit level, franchising allows for expansion with minimal capital. Since it is the franchisee, and not the franchisor, who signs leases and commits to various service contracts, franchising also allows for expansion with virtually no contingent liability, thus greatly reducing the risk to the franchisor.
 Another barrier to expansion facing many of today's businesses is finding and retaining good unit managers. Franchising allows the business owner to overcome many of these problems by substituting a motivated franchisee for the unit manager. And since a franchisor's income is based on the franchisee's gross sales, and not profitability, monitoring unit level expenses becomes significantly less important. Finally, opening a unit takes time; hunting for sites, negotiating leases, arranging for design and build-out, securing financing, hiring and training staff, and purchasing equipment and inventory. The end result is that the number of units you can open in any given period of time is limited. For companies with too little time, or too little staff, franchising is often the fastest way to grow. That's because it is the franchisee that performs most of these tasks. The franchisor provides the guidance and the franchisee does the legwork. Thus, franchising not only allows the franchisor financial leverage, but it allows him to leverage his resources as well.
While franchising is an exciting opportunity, let's see if it's for you!
For more information and to receive your FREE "Should I Franchise Report" Consider these questions...and more importantly, your answers...to this Franchisability Assessment Questionaire below: - Are your gross profits sufficient for a franchisee to pay you 4% to 8% royalty fees and still make a profit?
- Do you have a profitable prototype location?
- Do you have a strong management team capable of providing ongoing support and training to prospective franchisees?
- Do you have sufficient capitalization for both the launch of the franchise and ongoing training and support?
- Do you have available time to direct toward franchising?
- Do you have a protected trade identity consisting of Registered Federal and State Trademark/Service marks, uniform trade appearance, signage, and slogans?
- Do you have proven methods of operation and management compiled in a comprehensive operations manual?
- Do you have a comprehensive training program for franchisees?
- Do you have comprehensive legal documentation that reflects the company’s business strategies and operating policies?
- Do you have a demonstrated market demand for your products and services?
- Do you have a genuine understanding of the competition?
- Do you have established relationships with suppliers, lenders, and related key resources/ vendors?
A "yes" to all of these questions is not necessary! It's just a way to get you thinking in that direction. The franchise development team at FranchiseASAP can help you get to the next step or help you determine if franchising your business is feasible. |
