What’s so special about franchising?
Franchising, when executed properly, can be the most powerful method of building a business empire. It is a perfect example of the power of leverage.
Every franchisee is a self employed person in their own right. Every franchisee, as a small business person, is equally motivated to succeed in their own business within the franchise system. The Franchisor has created a win-win situation!
A business that franchises should ideally be driven by a desire and a need to service clients. Franchising can sometimes be seen as the only effective expansion method as even the best employee rarely matches up to a motivated self employed franchisee.
Franchising is expansion with minimal cash investment.
Compare these two scenarios; expanding a company operation opening a new retail outlet.
Scenario one
EXAMPLE ONLY using the symbol x to depict a unit of currency.
Expenditure Income
Annual lease costs X
Fitout costs X
Stock X
Total expenditure $ 3X Total income NIL
Scenario two. Franchisor opening a new franchisee run operation
Expenditure Income
Annual lease costs NIL Annual royalty fees X
Fit out costs NIL Franchise fee X
Stock NIL
Total expenditure NIL Total income $ 2X
This simplistic example speaks for itself. It certainly demonstrates what is very special about the power of franchising as a cost effective method of expansion.
http://www.franchisingplus.com.au
Author ; Carolyn Dufton Dip.Bus(franchising)
Carolyn is the principal of FranchisingPlus. FranchisingPlus is a franchising consultancy advising and mentoring on all aspects of franchising on a national and international basis.
The content displayed is franchisingplus copyright and can only be re-published with the permission of the author. www.franchisingplus.com.au/contact.htm.
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