Allows you to grow and expand your business without the need for significant capital outlay. The franchisee provides all the capital required to open and operate a unit. So whether you want a couple of extra business units or 20++ your costs remain relatively the same.
Unlike employing staff, who may or may not be passionate about your business and will ultimately leave, franchisees are invested in the success of the brand which is often referred to in franchising as 'skin in the game'. Long-term commitment, improved operational function are just some of the advantages.
Opening or starting a single service unit is expensive and takes time. Franchising allows companies to compete with much larger businesses so they can penetrate a particular market or territory much faster than an independent business operator.
Franchising allows franchisors to function effectively with a much smaller staff. Because franchisees will assume many of the responsibilities otherwise shouldered by head office, franchisors can leverage these efforts to reduce overall staffing.
The staffing leverage and ease of supervision allows franchised organisations to run in a highly profitable manner. Since franchisors can depend on their franchisees to cover all set up and running cost of the business unit, the franchisor’s organisation is run much leaner so the net result is that a franchise organisation can be more profitable.
A franchise model will work for 2 or 200+ franchise units and allows you to grow at the speed you're comfortable with.
Once the Franchise model is established it is often relatively simple to add additional services that operate in similar industries and markets. This enables the franchisor to achieve organic growth with little capital outlay.
By its very nature, franchising also reduces risk for the franchisor. Unless you choose to structure it differently, the franchisee has all the responsibility for the investment in the franchise operation, paying for any plant and equipment, purchasing inventory, hiring employees, and taking responsibility for any working capital needed to establish the business.
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