Want To Expand Your Business? Here Are 3 Key Reasons Why Franchising is The Best Option

Expanding your business through franchising has several advantages over opening company-run units

You're reading Entrepreneur India, an international franchise of Entrepreneur Media. This story originally appeared on Franchise India

If you’ve got a great business and looking to expand it further,creating a franchise will be the best option. Many businesses today increase their market share and expand across new areas by creating a franchise.


Franchise establishments are set to grow by 1.9 percent in recent years. The gross domestic product of the sector is forecast to increase by 6.1 percent to $451 billion. Franchise business output will also increase 6.2 percent to $757 billion.

Franchising offers a more cost-effective alternative to growing a business. Here are 3 key reasons for franchising your business.

Lower cost

The most common barrier to expansion faced by today’s small businesses is lack of access to capital. Creating a franchise provides the same satisfying experience of establishing an independent business and requires less money to get started.

To avoid the hassle of getting loans and investors, business owners can create franchises. The franchisees invest their own money and carry the risk of the business themselves. Thus, a franchisor does not have to raise as much capital to open a new branch.

Better Management

Many business owners have only themselves to rely on. No matter how you expand your business, you will have to delegate control to others. Finding and retaining good unit managers, is an obstacle faced by many entrepreneurs.

Franchisees make great managers. Managers of franchise branches carry the operational risk as they are personally invested in the business and have to ensure its success. Business owners can take advantage of the abundance of knowledge and experience.

Faster Expansion

Franchising is all about replicating a clear and successful business formula. Creating a franchise will kick start your expansion much faster than creating company-owned units because of its pre-existing strong business foundation. Franchising allows companies to compete with much larger businesses so they can saturate markets before these companies can respond.

Franchising is a win-win situation for both the franchisor and franchisees. When starting a new branch, you need to do many managerial works such as finding a new location, hiring staff etc. Whereas franchisees will take on this task themselves. Thus, franchised networks can be expanded more quickly than company-run networks.

The article was originally published on Franchise India by Sneha Santra.