Great advantages for the franchisor
Francization is a highly advantageous system for expanding businesses whose success have already been proven. This results in rapid expansion and a lower level of investment for the franchisor, without leading to potential loss of control of operations and/or the evolution of the franchise network.
One of the most important advantages this model brings to the businessperson is the utilization of economics of scale. The centralization of the demand for products enable the franchisor to negotiate in more favorable conditions.
Furthermore, in comparison with expansion through one’s own resources, a franchise requires a lower level of structure and investment. The franchisee, as the owner of his or her own business, not only provides the necessary initial capital, but is also responsible for the acquisition of the premises and the management after the launch of the business. This also simplifies the growth process and favors the pace of inaugurations.
Finally, we should point out that the franchisees are not employees of the network, but business people in their own right, and so generally speaking, a higher level of quality and productivity is required of them.
Safer entrepreneurship through franchise
Of the many benefits franchising has to offer an entrepreneur or investor, perhaps the most advantageous is the decrease in risk of failure. In addition, there is no decline in productivity on the part of the franchisee, which in fact, may even increase as a result of the detailed activity reports some franchise head offices demand of their franchisees. Regardless, the risk of failure decreases notably.
Like the franchisor, the franchisee will also benefit from economies of scale. The result being a substantial improvement in the price of supplies and, in general, in the cost of any actions performed as part of the franchising network. An example of this would be the access to large communication and marketing campaigns.
Furthermore, when the franchise holder belongs to a prestigious brand with an extensive history in the marketplace, the solid reputation generated by the franchise will have direct, positive repercussions on the franchisee’s business.
Finally, franchisees – who are at all times the entrepreneurs and the managers of their businesses – will be able to focus on generating business for their own sales outlets. It is, after all, the franchisor who is responsible for all of the other aspects such as management of supplies, dealing with suppliers, management computing systems, etc.