Keys to Successful Franchising: Why Franchise
potential profit
One key to successful franchising is for the Franchisor to generate meaningful profits from their franchise operations, including the initial Franchise Fee and on-going royalties or service fees. Other potential income streams include the sale of products, services or equipment, sales of US and international rights, leasing real estate and/or developing financing programs. Without profits, the Franchisor cannot sustain itself.
Fewer Managerial problems
Successful franchising creates motivated managers - Franchisees who have invested their money and time into their own futures.
ECONOMIES OF SCALE
The more locations a company has, the more buying power it commands. Using successful franchising to grow the brand also makes it easier to secure desirable sites.
MORE RAPID EXPANSION
Few companies have the strength necessary to penetrate a new market quickly. Through successful franchising, a company can develop new areas using the financial and managerial resources of its Franchisees, rather than investing its own money, time, personnel and energies.
Lower capital expenditures
The expense of expanding a business can be over-whelming. Through successful franchising, the Franchisor eliminates almost all of the costs normally associated with opening new locations.
lower on-going expenses
The fixed and variable expenses involved in running a franchise company are much lower than operating a similar number of company-owned facilities.
MARKETING ADVANTAGES
As the company grows through successful franchising, when local, regional and national campaigns take effect, all locations benefit, including company-owned units.