Notwithstanding the fact that there are problems to overcome, franchising can often be the best business approach. For the franchisor, it could mean putting a successful business at risk. It can require substantial capital investment and an even greater investment of time and human resources. New skills must be acquired and new duties and responsibilities assumed. The new system may lose money for years during the maturation stages. Absolute control over every aspect of the operations must be released, which can be unnerving, at best.

For the franchisee, it can be a frustrating search for the one right opportunity. If a young system is chosen, the risks can be even greater than starting an independent business. Tight control at one extreme, or being cut adrift to sink or swim on one’s own abilities on the other, can lead to major disappointments and unhappiness. It can be extremely unsettling to be too dependent on the actions of others. A substantial effort is often required to acquire new skills and adjust to a new work environment. So, why is franchising so popular and continuing to grow at such an incredible rate?

The Franchisor’s Story

Once the initial growing pains have been endured, there are substantial rewards for the business that chooses to expand through franchising. It is an expansion alternative which requires, in the final analysis, less capital, because the franchisees finance their own outlets.

A successful franchisor can direct a much larger and more complex business network with fewer employees than would be the case with the same business operated as a corporate owned chain. This also provides a better return on capital, overall, in most cases, notwithstanding the fact that an individual corporate owned store is more profitable for the franchisor than a franchised store.

Franchising also permits a more rapid expansion through a selected market. This results from the combined effect of the more motivated owner managers, the use of the franchisee’s capital and the standardization of construction and business systems.

It is Generally Recognized That an Owner Will Be More Attentive to the Business

A business can more easily expand within a larger geographical area through franchising. Expansion into foreign jurisdictions is often easier, because the franchisee will take responsibility for dealing with local customs, tastes and regulations. The reduced amount of supervision required in a franchise system helps to overcome the problems of distance inherent in conducting business in other provinces or countries. Franchising is sometimes utilized, by a business which has expanded to it limit as a corporate owned network, to exploit markets which would otherwise be neglected.

In business, it is generally recognized that an owner will be more attentive than a manager. This is the central point which makes franchising so attractive. A franchisor can rest assured that the person operating his store will be “attending to business” much as he would.

And, there is strength in numbers. The successful franchisor can command incredible deals with suppliers of all sorts. The sometimes difficult to obtain mall locations will be in easy reach of a business that can assure a landlord of profitable and predictable tenants in all of his developments. Advertising budgets can be generous, and there are often greater resources for research and development. In many systems, franchisees provide the greatest contribution to improving the business.

The Franchisee’s Story

Franchising is the fastest and safest way to become a business owner. Rather than making all the mistakes and risking disaster at every turn of the road, a franchisee can buy the necessary experience and expertise. In many systems, franchisees get fantastic value in the knowledge they obtain for the dollars invested.

A franchise purchase is often an opportunity to acquire the use of an already established name with lots of goodwill. As an independent, the franchisee would have to invest many years and dollars to achieve the same name recognition.

These days, many of the best locations are simply not available to a new independent business. However, someone without any prior business experience can obtain a lease in the largest shopping mall in the country as a franchisee of an established system.

The group buying power of franchises can give the franchisee the important edge over the competition and improve profitability. The amount and quality of advertising a franchisee can obtain for his advertising contribution to the regional or national fund of the system is substantially greater than would be the case if the same dollars were spent for an independent business.

Most independent businesses can only dream about the research and development programs available in many franchise systems. Such research and development can make a big difference in competing and profitability.

When it is done properly and works well, franchising is a win/win situation for all concerned — not just for franchisors and franchisees, but also for consumers, landlords and suppliers. Consumers get superior products or services more efficiently and at better prices. Landlords can predictably increase their traffic flows and reduce the incidences of lease defaults. Suppliers can be assured of a steady volume of purchases with secure receivables.

Author Bio: Matthew Anderson is the founder and head of advertising for The Franchise Shop website which specialises in part time franchises for sale and is the largest UK franchise directory

Category: Business
Keywords: part time franchises,franchise directory