Why Do Businesses Begin Franchises?

Business Franchising

Why Do Businesses Begin Franchises?

If you start your own business and it is successful you make think of opening a new location for your business so you could make more profits. This is one option; however, you could turn your business into a franchise and become a franchisor. A franchisor is a person whose business idea, process, product, name etc. is being used by a franchise holder or franchisee. Therefore the franchisor creates a business and a proven system and then give's others who are called franchisees the right to mimic their business by using their name, selling their product or services and their proven system. So, why do people choose this franchise concept?

Becoming a franchisor has great benefits. One of the biggest benefits is that they are able to expand quickly and at much less the cost of opening a new location. Having more locations and in many areas will bring greater gains for the franchisor. Also the more locations they have the better they can offer their products and services to a wider variety of consumers. The franchisor will have fewer direct staff and also fewer staff problems. Also they franchisees will pay for the franchise and may also have other fees to pay continually so the franchisor will have continuous income from royalties which are based on the franchisees gross sales and/or fixed fees. They also have the benefits of purchasing power and purchasing in larger volumes which can be cost effective. Another big reason to become a franchisor is that are constantly getting new business and marketing techniques from their franchisees. Many franchisors report that they get 90% of their new marketing ideas from their franchisees who are dedicated to their franchise and franchisor. The franchisor can get to the point where they can step back and let the franchisees continue to achieve financial and business growth and they can live the lifestyle they so choose with a great income.

The only way this works is if people buy a franchise from them. So, why would someone choose to buy a franchise? There are many benefits associated with buying a franchise business. For example, there is less risk involved with buying a business that has already established a name for itself has a proven system and has ongoing training and support. Starting an independent business does not come with those perks! It is also proven that starting a franchise business holds a greater chance for success than starting your own independent business. Also, there is less involved with a system that already works especially if you will be provided training on that system. Another great benefit of being a franchise is you get incredible marketing advantages. Even if your name is well known already, most franchisors provide marketing as part of your deal. If you see a commercial for a franchise business, all the franchisees reap the benefits of it!

Becoming a franchisor is a great choice if you want to expand your business and make the money you have always dreamed of!