Is Franchising Right For Your Business?

Published in Forbes | February 18, 2020 | Author: Thomas Minieri -- If you’ve thought about scaling your business, you might have wondered whether or not franchising is the right choice. For me, transitioning from a small business owner to a franchisor helped me grow my business and scale much faster than I would have been able to do on my own—all while avoiding the excessive risk of a capital-intensive expansion.

Small business owners too often make the mistake of wanting to do everything themselves, including scale. If you’re ready to take your company to new heights, then consider some of these noteworthy benefits that I found during my experience as a franchisor.

FUNDING FOR EXPANSION

It can be costly to take your business to new markets or to expand with additional locations. One of the most appealing aspects of franchising is the ability to quickly scale by funding your expansion while avoiding taking on excessive risk, raising outside capital and increasing your overhead.

With a franchise model, the franchisee typically purchases a geographical territory where they’ll operate the brand. They are often responsible for much of the startup cost associated with opening that new location, including the build-out, marketing and funding of the location until its breakeven point is reached. For this reason, franchising your business may be a smart choice if you want to expand.

BETTER CUSTOMER EXPERIENCE

Another valuable reason to consider franchising is to maintain high customer service as the business grows. It’s no secret in business that quality tends to decline as a company expands. If customer service is a big part of your business, then franchising may help ensure it stays up to par.

With franchising, each additional location has a franchisee/owner with a genuine interest in preserving the reputation of that location because, while it’s the franchisor’s brand, that location is the franchisee’s business. You’re placing your trust in the hands of someone else, and it makes a difference when that person has invested money just like you have.

A franchisee has their money on the line and will typically be more invested in the customer’s experience and overall success of their location than a store manager who is an employee of a larger corporation. Better customer service overall and a group of people working together with a vested interest in the brand is a win for the franchisor and franchisee alike.

VOLUME DISCOUNTS

Volume discounts are usually out of reach for businesses with only one location, but they are easy to attain with a franchise model. Utilizing a single distributor for all of your franchises often opens the door for volume discounts while streamlining your company’s distribution.

The perks of instant volume discounts are appealing to prospective franchisees because they can be enjoyed even before developing their customer base — something that would be out of reach for a single small business.

MARKETING BENEFITS

Marketing is essential for a business’s success, especially when trying to get it off the ground. For small business owners, marketing can sometimes get lost in the chaos of everything, leading to a lack of brand awareness in their community. With a franchising model, franchisees enjoy the benefits of having a bigger marketing machine behind them, while the franchisor ensures their brand is being promoted consistently and uniformly in every market in which locations exist.

TECHNOLOGY

Franchising can open the possibilities of what’s feasible for your company in terms of technology as well. For a business with just one location, it would likely be cost-prohibitive to create customized software for booking, training or customer loyalty. However, a customized software solution becomes more cost-effective as the number of businesses that will be using it rises.

When I began to franchise my business, I consolidated all of our appointment bookings and customer service management into one call center to facilitate all phone and internet traffic for every location. We required our franchisees to utilize this call center and pay us fees to cover the expenses needed to run it.

Our call center was a huge success for our company because it eliminated the need to hire and manage a receptionist at each location, improved communications and sales with customers, and freed up our franchisees’ time to focus on other aspects of their businesses. It was a win-win arrangement and an example of capitalizing on the benefits of the franchise model.

Having a customized software solution for your franchised business can make it easier for all franchises to operate uniformly, improve the overall customer experience, make reporting more accurate and give your brand a competitive edge.

Franchise models can provide many benefits for franchisors and franchisees alike. Franchisors can enjoy scaling their business without sacrificing quality or raising outside funds, while franchisees benefit from entering an already proven business model with in-place resources behind it. It’s no small feat to build a successful business, and franchising may be the ideal way for you to get the most out of your company.