Franchising is a great, quick way to grow a business. It doesn’t require much capital, can operate with just a few employees, and comes with fewer risks and liabilities than other business models. It can increase the brand’s market share and equity and presents great opportunities for international expansion.
Not only is franchising highly beneficial to the franchisor and franchisee, but it is also of great importance to the overall global economy. If you are considering franchising your business or investing in an established franchise, read through this article to find out all that you need to know about franchises.
How Does It Work?
Franchising mainly works when a business owner, or a franchisor, licenses a franchisee with the right to run a business using the original business’ system and name. The franchisee is able to run the business for an agreed time period and offers the franchisor a fee in return. The franchisee provides the franchisor with an upfront payment or an ongoing fee, or a combination of both, depending on the system that they agree on, as well as their agreed percentage of profit or revenue.
Franchises ensure a reliable and satisfactory customer experience. This is because the quality of the products, the service, the maintenance and the appearance of the place, and the employees’ values and performance, are all controlled and overseen by the brand owner. The franchisee’s only duty is to invest in the expansion of the business, provide the location, and appoint a branch manager. This system ensures that the quality and the service of that specific business remains the same throughout all branches and locations. Whether a specific business location is a franchise, or a company-owned branch won’t matter to the customer as long as consistency and quality are guaranteed.
Is Franchising Popular?
There are more franchises than you think; in fact, your regular go-to shop or restaurant may be a franchise and you aren’t aware. . In the USA only, there are around 800,000 franchises in over 120 different industries with more than 9 million employees. Even when other businesses suffered economic declines, franchises continued to grow. It has become the presiding developer of small independently-owned startups and businesses for several decades now. Franchising continues to create economic opportunities for entrepreneurs and business owners and creates more job opportunities for people. It also improved the quality of life as it has made many products and services available and accessible to many people on a global level.
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