As you consider getting involved in franchising, you should consider what you stand to gain by becoming a franchisor. Franchising rewards have to outweigh the risks of franchising if you are to benefit from the experience.
Franchising Rewards and their Implications
So what are some of the rewards of franchising? To answer this question, it makes sense to think about what franchising entails in practical terms. Franchising essentially allows you to grow your business without bearing all the financial and logistical burdens on your own shoulders. In a sense, it is a division of labor and, in some ways, a distribution of risk. Because franchisees have a stake in the success of the franchise company, they are likely to invest more goodwill and energy than, say, an employee who is hired to manage a branch of a business. Thus, if the franchisor sells franchises to the right people, he or she will not need to stand over them and monitor them to make sure they’re doing things the right way.
A number of franchising rewards follow from the circumstances described above. One of them is the fact that franchising makes it possible for franchisors to slim down their operations for greater efficiency. It would be logistically and financially overwhelming for franchisors to own, develop and run different branches of their businesses in different cities from one central location. Franchising allows the decentralization of control and expenses. Hence, instead of all the operational decisions being made at the center, franchisees have the power to make important decisions while following a franchise blueprint. This sort of organizational structure can be tremendously efficient if the franchise blueprint is well thought out and if the franchisees are a good fit for the franchise company.
Other examples of franchising rewards are made apparent by the competitive capacity of franchise companies. As the previous paragraphs point out, franchising allows for the quick growth of a business. By buying franchising rights, franchisees invest their own resources into the business, making it possible for more stores to be opened and for the franchise company to grow a larger customer base. A franchise company with units in 50 different cities has greater competitive capacity than does a family-owned company with ten branches. The former is likely to fare better against competing businesses.
Other franchising rewards include the availability of more resources to devote to marketing research, the ability to save money by buying raw ingredients or goods in bulk and having them distributed to different units, and increased efficiency in staff recruitment and turnover.