Are You Franchise Ready?
Entrepreneur's New Year’s Guide
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While you might want to look at franchising as the next step to expanding your business, this is not the only sure shot way to make it work. However, there are certain attributes if you can identify in your business, which will help you decide better whether you are franchise ready or not. Here are some of them:
Does talent interest you?
If you like to have talented and creative people around, you can look at expanding into a franchise model. This is one business model, which invites a pool of talented individuals who are going to work for you as franchisee and are the ones looking at being the master of their own enterprises. They will walk the way with you and work hard to make a success of your brand expansion plan.
Save the Money Crunch
Within a franchise model, you will not have to bear an investment burden, while expanding and diversifying your region. That simply means that through a franchisee network, investment comes in with the franchisee. If you wish to expand without wishing to bear the risk of collaterals and too many overheads, look into branching out the franchise way.
Minimize your growth risk
Franchising can generate high financial returns for relatively little risk. Unlike adding company-owned outlets, when you franchise, you put relatively little money into adding each location. If you have a good business model, you can earn high royalties from sales at those outlets. The percentage returns you earn can be many times what you would have earned if you opened and ran the outlets yourself,” explains Scott Shane, professor at Case Western University.
If you are locally established and your region knows your product well, you are ready to franchise. Remember, a franchise business model works well with a region-wise expansion plan, where the penetration into your target audience is local and therefore means quick returns and quicker growth.
“Franchisees are normally well established as part of the local community, either on a personal level or as a result of their past business activities. This can give them a very significant advantage in gaining new business for the franchise at a local level. They will generally live within the franchise territory, be known there and will be seen as having made a permanent commitment. These are all attributes which generally do not apply to company employees and will be of enormous value in helping franchisees to penetrate their local market,” explains Nick Williams, managing consultant at Ashton Franchise Consulting.
This article was originally published on Franchise India by Uttara J Malhotra.