5 ADVANTAGES OF A FRANCHISE BUSINESS
Home Service Franchise
Most business owners have heard of franchising but don’t understand how they can benefit from it. Franchising your business means you still own it, but a multinational corporation – called a franchisee – brands and takes care of it! This can be done for any business, you could create a delivery service franchise, a home service franchise, or a florist franchise in the UK using the franchise business model! Here are 5 ways in which franchising changes the game for a business!
Access to Capital
Many businesses fail before they even begin because of the lack of capital available to them. Even before the 2008 financial crisis that led to credit-tightening for entrepreneurs, procuring capital on one’s own was difficult. Franchising offers an alternative means to capital acquisition. For instance, let’s say you want to invest in a home service franchise. Your franchisee will provide you with all the capital you need to open and run your business, which means you can focus on the business itself and not worry about finding investors!
Even the most innovative entrepreneurs can fall victim to someone else beating them to the market with the same idea. If your business isn’t growing fast enough, it gives your competitors, especially copycats, an advantage over you. Lack of capital can, again, slow down a business’s growth, but you now know that franchising solves this issue. Another way franchising helps your business grow faster is by allowing you to compete with much larger businesses – like corporations – before they saturate the market!
Small businesses typically don’t need as in-depth management as a corporation, but what if a business wants to expand? Managing multiple outlets can be extremely exhausting and often inefficient if you expand your business without franchising it. Franchising provides better management for businesses while taking care of all the boring stuff for you! Let’s say you have a florist franchise in the UK. Your franchise will undoubtedly perform better than smaller florist shops in the UK because franchisees always outperform individual managers. This has been proved anecdotally and by research!
Franchised businesses earn more long-term profits than non-franchised ones. A franchised business can expand more easily than a small independent business can, which means a franchise can operate in multiple cities simultaneously! You see a McDonald’s everywhere you go, don’t you? This also gives the business a large, loyal customer base because people know and trust the brand wherever they see it. Remember, your franchisee has the marketing power of huge corporations. Look at it this way, more people can easily recognise a delivery service franchise than a small delivery business that only operates in one or two cities!
Reduced Risk for Your Business
Franchising can ridiculously reduce a business’ risk because the franchisee pretty much holds responsibility for everything; be it hiring employees, maintaining a healthy working capital, executing leases, litigation; you name it!
Franchising your business can be a tedious process – there’s a lot of paperwork involved, after all! But the more you learn about how franchising works, the more you will realise what a great option it is for your business to thrive and grow!