What is Franchising?
(Meaning: Freedom) A method of business expansion whereas the franchising company uses other people’s capital in exchange for rights to operate a proprietory system to expand company outlets.
Franchisor Responsibilities:
| 1. Support of franchisees 2. Evolvement of Systems 3. Human Resources 4. Marketing 5. Public Relations 6. Expertise |
Franchisor Revenues:
| 1. Royalties 2. Franchise Fees 3. Construction Revenues 4. Administration Fees 5. Call center Support (industry specific) 6. Supplier Concessions (industry specific) |
Experts know that the number one criteria for expansion through franchising is the ownership and management of the business to be franchised.
Certainly the business needs to meet certain (franchise) criteria, but without the vision, commitment, knowledge and adequate investment of ownership and management franchising can be tremendously difficult. weFRANCHISEu Ltd. can help.
Why is Franchising a superior method of expansion:
1. CAPITAL IS INVESTED BY FRANCHISEES.
2. Less Complex MANAGEMENT STRUCTURE.
3. Strategically aligned partners (franchisees) they have a vested interest as you do.
Other Methods of Expansion
Company owned outlets: Expansion by this method is slow, requires large amounts of capital and can lead to difficulties in solid management resources and retention.
Joint ventures: This is a variation of company owned outlets, but these are established with either a passive investor or an active operator.