Successful businesses that want to expand can choose to franchise to increase their brand recognition and reduce risk, but what exactly is franchising and what do they need to know?
The beginning of franchising
While franchising as an idea first appeared in the Middle Ages, when nobles gave farmers rights to use their land in return for royalties, it was in the 1890s that Coca-Cola became the world’s biggest franchise. Today, McDonald’s owes much of its success to around 80% of its branches being franchised.
Growth opportunity
The biggest advantage of franchising is that it is a successful recipe for growth, giving a business vital capital and making it more likely that investors will put money into it. Franchises are also a good way of overcoming large distances. According to the Telegraph, franchising allows a business to replicate what it is doing without employment challenges and a large capital outlay.
Compared to traditional ways of expanding, franchising is less risky. When a business partners with franchisees, they are also invested in making the business a success. The franchisees are using their own capital to set up new locations and carry out daily operations, and they have the local knowledge required to make it work.
Businesses can expand their reach much more quickly than with traditional expansion methods, reaching a wider customer base and tapping into unknown markets.
Obtaining help
There are several ways to obtain support if you are thinking about franchising. These include franchise my business forums and experienced franchise consultants such as ashtonsfranchise.com/franchise-my-business, who will have the expertise to answer any questions about the process. Professional consultants and industry leaders are a key way to find out all you need to know about franchising before taking the leap.
In summary
The only cons to franchising a business are that you are relying on someone else to uphold your brand reputation and you lose an element of control; however, the minimised risks and quick growth potential easily outweigh these, allowing companies to reach new markets, expand, maximise their potential, and succeed.