If you work for your company to grow with the franchise model, while there are certainly many issues to consider in the first place. E 'should also consider consulting a suitably qualified specialists. Franchising is a model of many large companies, including Subway and McDonald's USA, and has inevitably contributed to their rapid expansion and global presence.
Do not dilute equity
When you finance the growth of your business through franchising, allows existing shareholders a bigger share of the capital of the company. This means they can go forward, the company in a way that they run to the right and enjoy the opportunities presented to them.
Scale Fast
Your company must be able to get faster if you opt for the franchising model to scale. Each time you enter new markets and sell franchises, the balance more from franchise fees. This is in comparison to other companies, often using very dilute their assets or equity to finance the project.
Limit losses
Depending on the structure of your franchise, it is unlikely that you will be able to reach a gross loss from the sale of a type of franchise business each year. Most franchisees pay an annual cost of administration of the franchisor, which is a percentage of revenue. This means that even if a particular franchise is not profitable, not adversely affect the company than usual, giving the company much more stable with a predictable outcome.
Good repair
It is likely that each franchise is run, if the owner is so closely are transferred to its success. This allows your company to do less micro-management concerns and worries about the long-term strategy more. This also means that it is very likely a higher caliber of management, rather than otherwise would be.
Cannibalization less problematic
If two franchisees to open restaurants near each other McDonald's, probably for the parent company. Not only do not receive the initial license fee of two companies, but also from increased revenue from its largest profit reached.
Although the benefits of this McDonald's, in this case, if the stores once they realize that they can compete against each other for the same companies are. This means that total revenue would be higher, but profitability should take a hit. With franchising, the company is safe from them.
Promoting efficiency
Through the production of responsibility of the concessionaire, as directly as possible, because the costs for your business, efficiency is possible within its own organization in a way that otherwise would not be possible to add momentum. If a franchise is more like sitting resources that can reflect that cost.
Economies of scale
Because you are measuring the critical mass much faster than you can reach any other way, this means that the expenditure can be shared across a larger organization Out For instance, if the company pays for a new product design for a win for everyone. This makes the work less expensive.
March 5, 2010
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