Franchising Versus Traditional Expansion Methods

Expand Without Capital

Allows you to grow and expand your business without the need for significant capital outlay. The franchisee provides all the start-up capital required to establish the business unit. So whether you want a couple of extra business units or 20++ your costs remain relatively the same.

Motivated People Growing Your Brand

The average employee will spend 18 months in a job, whereas the average length of time a franchisee spends in their franchise is 8 years. Franchisees are motivated and invested in the success of the brand which is often referred to in franchising as 'skin in the game'. Long-term commitment, improved operational function are just some of the advantages.

Rapid Growth

Opening or starting a business unit is expensive and takes time. A franchise model allows the franchisor to expand at a rate limited only by the number of franchisees wanting to come on board at that time, and then by how quickly they can provide the necessary support with unit establishment and training capacity.

Reduced Overheads

Franchising allows the head office to function with a much smaller staff, because franchisees are responsible for many of the day to day responsibilities.

Increased Profits

Franchised companies traditionally operate with a much smaller Head Office function, since franchisees cover all set up and running cost of the business unit, the franchisor’s organisation is run much leaner so the net result is that a franchise organisation can be more profitable.

Fully Scalable Model

A franchise model will work for 2 or 200+ franchise units and allows you to grow at the speed you're comfortable with.

Expansion Into Additional Markets

Once the Franchise model is established it is often relatively simple to add additional services that operate in similar industries and markets. This enables the franchisor to achieve organic growth with little capital outlay.

Risk Reduction

Franchising significantly reduces the risk for the franchisor. In a typical franchise model the franchisee has all the responsibility for the upfront investment in establishing the franchise including purchasing plant and equipment, premises fit-out, hiring employees, and any working capital required in the beginning. 

The combination of these factors provides you with substantially reduced risk. Franchisors can grow to hundreds or even thousands of units with limited investment and without spending any of their own capital on unit expansion.