Starting a Business: 7 Benefits of Franchising Your Brand

Franchises are a large part of our economy. They employ over 8 million people in the United States and give over $800 million to the economy. Also, they help allow families to own business and give back to the local community.

If you're starting a business, you'll want to be in-the-know when it comes to franchising before going any further. Keep reading to find out the benefits of franchising!

Franchising Basics Explained

A franchise starts with a franchisor who establishes the business. They create the brand and the business system. A franchisee pays a royalty to operate under the franchisor's name and system. The term franchise refers to the contract between franchisor and franchisee.

Typically, Business Format Franchising is the most common type. The franchisor will give the franchisee development support, training, standards, quality control, operating manuals, business advisory support, and a marketing strategy.

Franchises aren't just for one type of business either. Any business has the potential to reap the benefits of franchising. If you decide you are interested in how to franchise your business, our professionals can help you work out all the details. 

1. Creates Capital

Franchisees use their own capital. That means the franchisor does not need capital to grow. Instead of borrowing money for growth, the franchisees provide their own and eliminate financial risks.

This can be one of the biggest concerns when it comes to expanding your business. Franchisees cover their own signs, rent, and opening expenses. Each new location will be completely funded by their own investment.

2. Limited Liability

The franchisor avoids a lot of responsibility. This offers peace of mind to avoid legal repercussions. The franchisee signs all the leases and finances.

For most situations, issues that arise with employees also fall onto the franchisee because they are employees of the franchisee. This includes work-related injuries, sexual harassment, EEOC violations, and more.



3. Access to the Best Talent

As a franchise, you're likely to attract the best of the best. The hardest workers prefer to work for something they have invested in. This is because their work will reflect on how well the location performs.

In return, if the business succeeds, that will be reflected to them. There are great incentives when working with a franchise that can't be offered through other means.

4. Speeds up Expansion

Franchising opens up a wide geographical area. This allows franchisors to avoid three of the biggest issues when it comes to expansion. 

The first is money. As we discussed previously, they don't need to acquire the capital because it is already provided.

The second is the managers. Managers are the investors or people hired by investors. These people get the business up and running plus sustain the business.

The third is the employees. Employees are hired by the franchisee and are their responsibility.

You'll have the opportunity to hop states and grow across the country without having to orchestrate every little move. It can take years to reach this point on your own. You could have many locations opening at once without worry.

5. Motivation to Succeed

Since the franchisee or manager is now solely responsible for each location, they will be much more motivated to succeed. So much of the responsibility is shifted onto them, they must learn how to get the most out of their business or they will be jobless.

They will understand that their business and the jobs of their employees now rests on their shoulders. While they still follow the standards and systems set forth by your brand, they will be invested in what they own.

You can see the difference in stores that are corporate-owned versus locally owned. Several examples show a difference the next in businesses that went from corporate to franchised.

6. Brand Building

Since the financial risk is significantly reduced when opening new locations, the brand will grow much quicker. With a quicker expansion time, it's easier to grow the brand far and wide.

The retail presence will be extended without additional overhead costs. As your brand grows, you will acquire more franchisees and help to develop your story. 

Franchisees often contribute funds that go toward common advertising and promotional activities. The franchisor has control over this fund and uses it to build the brand even more.

7. International Expansion

Similar to domestic expansion, international expansion becomes much more of a possibility. You can only imagine the financial risk that comes with expanding across borders and oceans. It can happen much quicker and easier in this case. 

By having a local partner involved, you are better able to fund the operation and understand what will help your franchise succeed in this new location. Any time a business moves into an unknown culture, there will likely need to be a few changes.

Someone who completely understands the way that people operate and the values they hold will be a huge help. This is a wonderful aid when dealing with foreign languages, customs, and values.

Start Your Business the Right Way With Benefits of Franchising

Whether you are starting a completely new business or are interested in taking your business in a new direction, you should consider franchising as an option. These are just a few of the benefits of franchising.

It's not a difficult process and if you need help with getting a license for franchising or just some general guidance, we are here to help you. Contact us to get the best advice from our trained professionals.