Very simply, franchising is a means to expand your business. While some consider franchising an industry, in reality, franchising is a growth strategy. A franchisor enters into an agreement or license which gives the franchisee the rights to market a product or service using the trademark and operating method of the franchisor. The franchisee has the obligation to pay the franchisor certain fees in exchange for these rights. The franchisor has the obligation to provide these rights and support the franchisee. That’s the legal definition of franchising. At the end of the day, however, franchising is about relationships.
High Quality, Motivated Partners
Franchising allows you to expand your business with partners (franchisees) who are accountable and motivated by their own ownership in the business.
Consistent Quality
Franchisees are required and motivated to deliver a quality product or service experience. It’s your job as the franchisor to ensure consistent quality of your brand throughout all locations.
Risk Reduction
Franchising is a strategy that allows the franchisor to minimize their risk, both financially and legally. Start-up funding needed to open franchise locations and for initial day-to-day operation of the franchise is provided by the franchisee, not the franchisor. While some people think franchisors make a lot of money collecting initial fees, they don’t. However, successful franchisors know that the costs associated with finding quality prospects (acquisition costs) are recouped through the Initial Franchise Fee.
Personally Rewarding
Franchising is a solid, well-established strategy for growing a business. However, it’s more than that. If done properly it can be a very personally rewarding experience. Helping others realize the dream of business ownership by partaking in a business you are already passionate about is a very unique and gratifying experience.