It is very important to note that franchisees do not invest so easily in new or untested concepts. Franchising is the latest, amongst the very successful ways venture capital to start a new unit.
Venture capital franchise business expansion today is a self-funding exercise for successful business concepts. It has been seen that the total cost of franchising is at most times much lesser than the cost of establishing one new unit. When a franchisor embarks upon a franchise development program, they initially invest in the franchise system and then the balance costs of expansion along with the risks are put in by the franchisees or franchise angel investors. Since the franchisees pay franchise fee and then the continuous royalties, the franchise business is injected with the much needed thrust capital ensuring that the right franchise strategy would ensure that you have an immediate low risk high revenue generator or franchise partner. Evidently our franchising services has provided capital for growth of the business in any following conditions:
- You do not have sufficient resources that includes the venture capital, people, and time either of these to create a company owned growth system.
- If you want to complement an existing sales or distributing system.
- If your business inherently responds better to entrepreneurs than managers and want to improve systems through more efficient control mechanisms.
- Your business can grow faster using franchising than the company owned model.
- Your business has good margins and can work effectively with consumers through franchisees.
- You would also want to avoid the Fifteen Most Costly Mistakes that franchisors commit.