7 Benefits of Franchising For Businesses

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Benefits of Franchising

Franchising, a marketing concept that has helped many businesses around the world achieve success and rapid growth, is gaining popularity. Many business owners are not too sure if assigning independent people to market and distribute their goods or services and participate in other aspects of their business is a great idea.

However, there are benefits of franchising that every business owner who wants to achieve serious growth and contemplates exploring the realm of franchising should consider.

1. A Great Way Of Capital Acquisition

The lack of capital is the greatest expansion barrier faced by many modern small businesses. Many entrepreneurs fail to achieve their growth goals because they lack the resources and ability to fund them. Franchising allows entrepreneurs to expand their startups, minus the risk of debt or equity cost. Businesses are able to grow from the use of the resources of other parties.

2. Committed Management Acquired

Many entrepreneurs looking to expand often experience setbacks when it comes to hiring and retaining reliable unit managers. Sometimes they might spend resources training and hiring a good manager, only for them to leave or get enticed by a competitor. With franchising however, problems like that become a thing of the past since the franchisee who has invested in the business becomes the owner. The franchisee has a stake in the business, therefore they will be better and committed managers and the operational quality will no doubt go up.

3. Rapid Growth

With markets becoming competitive every day, many entrepreneurs often worry that some competitor with greater resources will beat them to the market with a similar concept.

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Franchising in this case, is the only way to ensure that they capture that much-needed market leadership before their competitors think about it. It offers this financial leverage for the startup to achieve rapid growth and compete with larger and more established businesses for the market share.

4. Increased Profitability

Franchising offers ease of supervision and staffing leverage, this enables such an organization to achieve greater profitability. The franchisee, will undertake all matters related to the business such as the hiring, training, site selection, lease negotiation, accounting, local marketing and anything related to human resources. The end result is nothing less than more profitability.

5. Increased Business Value

Rapid growth, more profitability and improved organizational leverage contributes to improved valuations. When the entrepreneur finally decides to sell the enterprise, the fact that he is a successful franchisor, will work in his favor. The business will in the end fetch him a good price enough to turn another new startup idea into a reality and in future sell it again after franchising again.

6. Penetration Of Other Markets

With franchising, business entrepreneurs can consider expanding to secondary and tertiary markets. This will in the end improve the chances of success for the franchise. Penetrations to these markets will be essential in the development of the enterprise and this can only be possible with the increased capital from franchising.

7. Low Risk

Naturally franchising reduces the risk for the business owner. Since the franchisee shoulders all responsibility including financial and operations, the owner doesn’t shoulder any liability. With a franchise opportunity, the entrepreneur who is the franchisor in this case, is in a position to grow as many units as they desire without going into their own pockets for financing.

Franchising is the best idea for businesses that want to grow to their full potential. All one needs is a great business idea that can generate serious profits. The great business idea can generate thousands of units worldwide. Entrepreneurs with such amazing ideas can no longer just dream, but they have an opportunity to grow their startups beyond their wildest dreams with franchising.

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