Posted: Thu 13th Aug 2015
Growing through franchising is particularly suited to companies that have a model which is easily transferable and has a process to follow for making a profit. For example dance activities for children or tasting parties for food fans. The aim is to perfect a model that works in one area and then grow by enabling others to replicate it.
According to the British Franchise Association, the official description of franchising is: "the granting of a licence by one person (the franchisor) to another (the franchisee), which entitles the franchisee to trade as their own business under the brand of the franchisor, following a proven business model."
It's an increasingly popular way for business owners to grow as it is achievable on low cost and at high speed:
Low cost: As the capital required for expansion comes from the franchisees who pay a fee to buy the model and apply it in their area
High speed: As you license the business to entrepreneurial individuals who are motivated to grow and, often, based in the territory of expansion. Taking this route to growth does require an investment of time in perfecting the business model and money to develop the franchise package
Consider these elements that make up the franchise package:
Track record: Ensure the business is a working model of success. Franchisees will pay money for something they can see has a clear path to profit
Training: The business model is something that has to be teach-able, i.e. you can train people (some of whom may be quite new to business) on how the operation works
Toolkit: After training provide a comprehensive toolkit or manual that guides the franchisee with tips on marketing, sales, finance and growing the business
Territory: Is your franchise opportunity restricted to a certain territory? i.e. a franchisee pays to have access to a defined geographic area.
Termination: Put provisions in place to terminate the agreement if it's not working; from either side!
Consider franchising as a route to scaling your business, increasing profile and growing profits.
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