Many businesses reach the point where they are running successfully and it becomes obvious that there is opportunity for further growth. A young expanding firm has two options to secure the capital it needs for expansion: sell equity or sell franchises. A third option, selling debt may not be a possibility in the early stages of a firm’s existence as it may lack required collateral and a proven track record. Franchising may help many companies grow to an optimum size and at the same time maximize profitability.
A franchise network spanning national and potentially international markets offers better diversification and insulation from localized economic or competitive forces and early access to high-growth markets. It also provides multiple parallel growth paths to drive network sales revenue. In a well developed franchise network the customer service experience is better than in a company-owned business. Governments are granting franchises embracing transport, water and energy distribution and generation. Sport is heavily structured around a franchised model in basketball, football and motor sports.
The difference between franchising and the other forms of business, such as manufacturing and retail is that it provides opportunity, prosperity, security and a sense of continuing growth. Franchising allows entrepreneurs to partner with others for the benefit of the brand thereby ensuring rapid expansion of a business much quicker than what can be achieved through company-owned expansion.
Even franchised businesses located in major markets like the United States need to develop a global outlook as competitive pressures impact growth, the domestic economy matures and the future global growth opportunities are shifting to China, Brazil, Russia and India where franchising is a newly emerging opportunity for both domestic and foreign franchisors.
The reward for a business that has successfully executed a domestic and international franchise program is significant growth in shareholder value. Whether a business network is located in Europe, North or South America, Africa, Australia, India or Asia, a franchise strategy needs to be considered earlier rather than later in domestic growth phase to take advantage of growth opportunities and a defense against internationalization of local market.
The combination of capital for expansion and a motivated owner-operator investing in his or her capital and time in both brand as well as business is a powerful strategic combination. If the marketing key personnel feel the development of a franchising strategy should be delayed or is too complex and overwhelming they can consult some experts on implementation of franchise. With the right advice and a staged approach to developing the strategy, structure, economics and commercial policies needed to plan a successful franchise network you too can adopt a “born global” attitude that will allow your business to join the thousands of franchise systems now operating in domestic foreign markets.
If one wants to explore the opportunities franchising offers some formal program conducted by Franchise India Holdings Limited in India can be attended.
The franchise program includes detailed information of the initial franchise fee, ongoing royalty, territory size, key operational processes, advertising fund, grand launch and other key components of what will become your franchise agreement. Usually the pro-forma financials and actual operations of a franchisor’s existing pilot store or locations are used as the basis for establishing these items.
Franchising enables a franchisee Business owner to sell products & services under a trusted and recognized brand name which franchisor has developed and tested over a period of time. Over & above the franchisor offers training and support services like choosing the right location, access to capital in the form of loans through a financial institution, start-up assistance, management advice and the foundation and experience established by the franchisor not to mention other franchise owners within the company thereby permitting the franchisee to establish own business even with little prior experience thereby drastically minimizing the risk of ‘going it alone’.