FOR THE FRANCHISOR:

 

These are some of the advantages of franchising.

 

• Provides Expansion Capital - The franchisee makes the investment to open the branch unit.

 

• Fast Growth - Franchising allows companies to grow quickly because the franchise buyer puts up the investment capital and provides "dedicated" management - thus freeing up the franchisor's time to open more units.

                                                                                                                           

• Quality On-Site Management - Since the franchisee is more dedicated than a company employee, sales and profits will be higher, expenses will be lower, customer satisfaction will be greater, and quality standards will be maintained. Today, most franchisees are well-educated, experienced, former middle managers.

 

• Fewer Day-to-Day Operating Headaches - The franchisee makes the day-to-day operating decisions. They take care of employee problems, hiring, firing, etc.

 

• Less Corporate Overhead - Since the franchise owner takes care of the day-to-day operating responsibility, the parent company support structure for franchise units is smaller compared to company-owned units.

 

• Faster Market Penetration - Franchising can allow a company to penetrate the market quickly.

 

• Higher System-Wide Sales - Research has shown that individual unit sales increase when converted to a franchise system. Because the owner is on site, a typical franchise unit will have higher sales than a company-owned unit.

 

• Captive Market For Products - Franchising can provide a dedicated captive market to manufacturers.

 

• Financial Leverage - Franchising provides a way to cash in on your experience and knowledge by selling it to others.

 

• Opens Up Regional/National Account Opportunities - Some businesses lend themselves to serving regional or national accounts, whereas a local independent couldn't service a national account.

 

FOR THE FRANCHISEE:

These are some of the advantages of buying a franchise.

 

• Lower Risk - Since a franchise is usually a duplicate of an already successful business, it should have a good chance of success.

 

• Quicker Startup/Higher Sales/Higher Profit/Increased Equity - When a person buys a franchise their getting start-up support and their buying the "learning curve." As an alternative, if they were to start a similar independent business it would take longer to achieve the sales volume associated with buying a franchise. The trial and error stages have already been done by the franchisor and as a result, profits and business equity are built faster.

 

• Be One's Own Boss - Franchising allows an individual to feel the pride and independence of owning their own business.

 

• Training - The training an individual receives in a franchise should help them avoid mistakes and generate more volume and profits.

 

• Support/Ongoing Assistance - Ongoing support gives a franchise owner quick access to help solve problems and a feeling of not being alone.

 

• Collective Buying Power - Collective buying power should help reduce costs of doing business.

• Regional/National Marketing - A chain of operating units can afford to generate far more exposure and advertising than can an independent, resulting in higher sales volume.

 

• Systems/Policies/Procedures Already Tested and Established - Tested and proven systems save development time and help prevent mistakes.

 

• Trademarks - Customer awareness of the franchise name is a tremendous benefit.

 

• Mutual Destiny - The success of the franchise owner is in the best interest of the franchisor.

 

• Research and Development - The franchise owner can utilize the research and development performed by the franchisor. This saves valuable time and capital.