My HMO Journey: No rest for the wicked as we approach 2021
My HMO Journey: No rest for the wicked as we approach...
Put simply, franchising is just a strategy for growing a business. But it is a strategy that is being adopted by more and more companies of all types and sizes to achieve rapid, low cost expansion. Here are some of the main reason businesses choose to franchise:
Capital
You’ve heard the
term “Using other people’s money” as an often quoted secret for
achieving business success. Well, when you franchise your business,
your franchisees put in the money required to expand your
business.
Rapid Growth
You can
achieve a high rate of growth using franchising. This is due to a
combination of factors but the point is, whether you are in a
competitive new market where those that achieve an early land grab
will be the winners, or you just want to get ahead of your
competitors, franchising offers you a realistic, low cost way to
grow quickly.
Increase the Value of Your
Business
Franchising can have an
immediate impact on the value of your business and not just because
you have increased revenue and profits. Once you have demonstrated
with your first few franchisees that your business model can be
successfully duplicated, you have a genuine growth story to tell
with big upside potential for any would-be investor.
Motivated Partners
This
reason is easy to understand – if the person running one of your
business units has invested their own money into it, they are
motivated to perform!
Local Knowledge
You can
gain competitive advantage by tapping into the local knowledge of
your franchisees. Forget expensive market research and learning
about the local market as you go – franchisees know the local
market, the people, the places and have networks already in
place.
Marketing Firepower
An
often underestimated reason for franchising is the power of the
franchisee marketing fund. Imagine your business has national
coverage – how much would you be spending on marketing? Same
national coverage, but this time it's a franchised network and your
franchisees are paying for the marketing – what has that done for
your bottom line?
Group Buying Strength
Again, an easy one to get – as your network rapidly grows, your
buying power grows with it, meaning you can negotiate harder with
suppliers and reduce costs.
De-Risking Your Business
If you wholly own a multi site business and due to external factors
such as a downturn in the economy, revenues fall, some of those
trading units may become loss making and even threaten the survival
of your business. On the other hand, if that same network is
franchised, you are cushioned from the effects of the downturn.
Your revenue is typically based on the revenue, not profit, of your
franchisees. So even if you have some loss making franchisees, you
can still be generating revenue and profits. Which by the way, is
why so few franchise systems fail during recessions in comparison
to wholly owned networks.