There are many reasons to franchise your business. Many would choose not to Franchise their business and often do not have a broad level of thinking. A few of the reasons they do not venture out into Franchise is due to:
Top Reasons Not to Franchise Your Business:
- Theft of Intellectual Property, Infringement of Trademark and Copy Cat Business boards with slight variations in names.
- Underreporting of Profits as many businesses still operate on cash.
- Franchises often do things their own ways.
- Franchises create cartels that start threatening the franchisor.
- Cultural Diversity and State / Region Wise Disconnect as most franchisors are unable to get a country footprint in place properly.
- Taxation Issues even after the Implementation of GST, customers not willing to pay tax as non franchised competitors are able to offer that facility.
- Finally, Since there is no single franchise law governing franchising in India, unscrupulous operators have been appointing franchises and cheating investors and entrepreneurs without creating adequate support systems for the franchise.
With all that in mind, let us focus on the positives of Why You Should Franchise Your Business
Every business today would want to grow and make their brand known and successful throughout the country. To Franchise your business is the best platform to reach out to people far and wide.
Let us see the reasons to franchise:
Faster National Expansion:
Establishing your business as a franchise across the country would help in growing your network faster as franchisees will fund the new outlets. Franchise your business would involve lesser costs than the overheads and expenses for opening company-owned outlets.
Better Motivated Entrepreneurs:
By choosing to franchise as a means of business expansion. You can take benefit from owner-operators’ ambition, energy, and commitment to the business and its standards. Because he or she has a vested interest in the business, a franchise is more motivated and effective than a salaried manager.
The return on investment can be higher for a business that expands through franchising as less capital employed. The franchisor’s profits are generated on a much lower capital investment. Although the revenue received from franchised units is logically less than that from 100% company-owned outlets; a higher percentage of the revenue is actual profit. This is one of the most motivated reasons to franchise your business.
Get the Edge on Competition:
Customers are often attracted to a new idea and will stay with a brand if the product or service is as good as; better than that supplied by their previous provider. By quickly expanding into new geographical areas, you are well placed – as long as your product or service is good enough – to hijack your competitors’ customers and retain them.
Effective Quality Controls:
Franchising is all about following a system. As all your franchisees are following the same system, customers throughout the network should receive the same high-quality service, irrespective of location. They will always know what to expect from your brand, and that encourages loyalty.
Running a franchise system requires less management than a company owned a chain of outlets. The franchise will manage the hiring, training, motivating and retaining competent staff. It means you can get a better edge on competitors unable to operate with a compact management base, and who therefore need to spend more on this element.
Local Knowledge from Franchisees:
Expanding your business into new areas requires thorough research. Expansion through franchising passes the main responsibility for evaluating a new territory onto the franchise, which probably already possesses a great deal of valuable local knowledge. This is especially attractive when expanding a business into foreign markets. By using indigenous franchisees, you can tap into the local business knowledge. Which you may otherwise have been unable to obtain.
Group Purchasing Strength:
Centralized buying allows your entire network to benefit from volume discounts that an independent trader would be unable to obtain. As a result, your franchised branches will be in a better position to offer competitive prices; which will help to increase your market share.
A Dedicated Distribution Network:
If you are a manufacturer or service provider, establishing the sales function of your business as a franchise operation provides you with a distribution network. Which is entirely focused on the supply of your product or service to customers.
As your network develops, all your outlets can benefit from the group’s marketing initiatives; both at a national and regional level. A positive network spirit will encourage franchisees to help one another through referrals as your customers become increasingly familiar with your brand; expanding on a national level.
There are definite advantages of expanding a business through franchising but there are certain criteria to consider before embarking on the franchise route. Prospective franchisors must be ready to invest time, effort, and money into the correct development of their franchise system. With the right help and guidance, your chances of success are greatly improved – that’s why you must always consult franchise experts from the start.