Franchising their brand has become one of the most loved and highly opted for methods of business expansion. Franchising has observed a growth of around 30-35% over the last four-five years with the overall turnover is estimated at around INR 938 billion. Currently, the sector contributes nearly 1.8% to the Indian GDP and is estimated to contribute around 4% by the mid of the year 2022.
The primary reason
most entrepreneurs choose to franchise their venture is that it allows them to
expand without the risk of debt or the cost of equity. Since the franchisee
provides all the capital required to open and operate a unit, it allows
companies to grow using the resources of the franchisees.
Advantages of a franchise
Capital
Since franchisees who
will buy your franchise will use their capital, the franchisor has no actual
investment at the unit establishment level. Franchising allows companies to
leverage off the assets of franchisees and use them as their tools of
expansion.
Risk Reduction
Since setting up a
franchise does not involve any capital at the franchisor's end, therefore there
is negligible risk involved in case the unit fails to perform well. With no
capital invested in units, the risk is reduced substantially.
Limited Contingent Liability
In the case of a franchise
unit, the franchisor will not be signing leases, taking on financing, etc., and
will thus expand his brand's name with limited contingent liability.
Speed of Growth
By using the time and
efforts of its franchisees to generate brand performance, a franchisor can grow
much faster without adding staff.
Reduced Role in Day-to-Day Operations
As a franchisor, your
primary concern involves channelizing the franchisee’s top-line and high-level
performance, reducing the scope of your involvement in day-to-day management.
Reduced Indirect Liability
The liability for
acts of employees and any mistakes made by them is not to be borne by you For
occurrences in the unit (e.g., slip-and-fall)it is a part of the franchise's
liability, not the franchisor, for the most part.
Highly Motivated Management
Franchising can
provide a company with highly motivated management who will treat individual
units as its own. This will result in better performance of the franchise
leading to higher profit generation.
Quality Control
Franchisees generally
keep their units in better operational shape than unit managers and, as a part
of the community, are better able to promote these units locally. They ensure
that the goods they sell are consumer-friendly leading to a higher volume of sales.
Long-Term Management
The franchisor can
invest in the long-term training of its franchisees, as they are like assets
and unlikely to leave short-term.
Unit Performance
Units are generally
better to run, as is exhibited in the fact that franchised stores generally
outperform company-owned stores in terms of sales volume. This is mainly due to
double efforts being put into the success of the unit.
Brand Building
This ability to grow
the organization without abundant additions to overhead will allow franchisors
to grow their retail presence and their brand will grow more rapidly and
effectively.
Advertising
Franchisees will
often contribute to a common advertising, marketing, and promotional fund. This
fund will be used to promote the brand to increase its sales. This is usually
done under the direction of the franchisor along with the franchisee's
assistance.
International expansion
International
extension becomes easier, faster, and carries far less risk since a local
partner becomes involved in setting up the franchise unit. The franchisee can
help you to ascertain the working strategies as per the common consumer
preference.
Increased Profitability
The staffing leverage
and ease of supervision mentioned above allow franchise organizations to run in
a highly profitable manner. Since franchisors can depend on their franchisees
to engage in site selection, lease negotiation, local marketing, hiring,
training, accounting, payroll, and other human resources functions the
franchisor’s organization is typically much meagerer (and often leverages off
the organization that's already in place to support company operations). So the
net result is that a franchise organization can be more profitable.
Franchise performance Consultant
When considering
franchising your business, it is essential to engage somebody with the requisite knowledge and experience.
More importantly, consultants that have first-hand experience in creating,
developing, and managing a thriving franchise network, providing practical and
effective solutions to problems that might arise during the setup.
Need for a franchise consultant
However successful a
business is, franchising your venture is like getting into a new business. Even
though they remain in their current business sector, they are also moving into
the franchising business which is altogether a new take. They need to learn the
science, art, and skills that need to be involved in franchising, and a good
consulting firm or a team of experienced and successful consultants will
transfer those skills.
● If you want to franchise your pre-existing
business venture, a franchise consultant can help evaluate your interests and
goals by assessing your business model. It will help you find suitable
franchisees that you may want to engage with through franchise ownership.
● A franchising consulting may help you to
assess, examine the markets, take a closer view of your business situation and
then find potential people who would invest and collaborate in expanding the
business through being your franchisee.
● Therefore, an expert franchising consultant is
someone who has the skill to channel your thoughts and ideas, evaluate your
interests and the markets in a system that brings you to pursue the
possibilities that eventually have a high scope for you to succeed.
● It is necessary to choose a good franchise
consultant who has a considerable amount of experience in working with such
companies and candidates with a track record that can show successful growth
and expansion.
● Look for sincerity and expertise in a
franchise consultant. If you are a franchisor, then there would be a lot of
discussion on strategic planning, competitor analysis, industry best practices,
staff recommendations, and things like support, royalty, territory selection,
franchise structure that may impact the working and reputation of your overall
business.
● The role of a franchise consultant becomes
vital in addressing these and giving you the best of possibilities that will
help you take your business to great heights.
● The consultant will either guide the franchisor
through the process of producing the manuals and necessary documents or they
will do it for them. They will also liaise with the chosen franchise lawyer to
draft the agreement and comply with all the legal requirements. This will help
in speeding up the process and reducing the cost through previous experience.
Thus, the mantra to a successful franchise business is to get a clear idea of your business aims and successfully connect them with the prevalent market scenario. A team of franchise consultants can prove to be a helpful tool when it comes to complying with all the required methods and following a proper procedure. Apart from the assistance offered by a franchise consultant, a highly motivated franchisor who is dedicated to working towards the success of its brand can be the key to the the success of a business.
Running a franchise requires a strong drive that could
lead you towards success with motivation and expertise. Your devotion towards
your franchise will deliver a positive brand experience to the customers.
A standardized
business process, proper support and training, proper marketing and operational
strategies, and a dedicated franchisor are what make a franchise successful.
.png)
No comments:
Post a Comment