Understanding the Franchising Format

There are three main options for capturing a larger section of the market when time comes to expand. Building new company owned units is one idea, but many companies find that opening up a new franchise opportunity is the best option. Others decide to combine the two methods for a multi-pronged approach. Franchising helps the parent company create new customers around the country, even if they only have a few locations. Setting up key distribution points doesn't have to drain your budget if you allow independent business owners to take on some of the costs and, in exchange, keep some of the profits.

franchise growth

You will need to share certain elements with your franchisees, which include:

  • A complete brand identity that is strong and well developed - this usually includes a name, logo and associated materials
  • Marketing and distribution connections - arranging for suppliers and producing consistent marketing guidelines is key
  • Complete business system - your package should include a guide on how to operate the day to day actions of the business, in addition to long term goals

Building alliances between your company and independent owners that are ready to work hard will help you to reach expansion goals. Their drive to win over the competition will help your company dominate new markets as quickly as possible.

Many business owners misunderstand the actual format of a franchise agreement before they have real experience with one. In a franchise, you aren't selling your system or brand. You are leasing it in the form of a license. If the business owner doesn't live up to your standards, you can terminate the contract and take your name back. This gives you a lot more protection than many companies assume before they start their research. It's also crucial to support the franchisees so that they are able to work together rather than against each other. If you space out your locations properly, you can create a web of cooperative teams that can wipe out the competition.

Don't develop a sense of strict ownership when building your own franchise system. Focus on becoming part of a thriving team instead. This will help you receive more support from the franchiser and your fellow business owners as well. There's no use in creating unnecessary divisions when everyone benefits from being a part of the team.