Franchising is a way of business expansion by allowing other parties to sell products or services such as you offer by use of your brand, trademark and even management skills. The franchisee will use your goodwill and your service mark, will pay you the normal deposit and market your products but you retain your major position and management of the business. It is a business that requires mutual agreement and contracts with terms and conditions based on understanding between the two entities. Like any other business transaction there are many advantages, here we’ve put together some of them.
Helps in Diverting Business Risks
Franchising involves setting up business in other parts of the world or in a small scale business other parts of town. If there are risks that your business faces in your current location, chances are that the risks may be less or different in another location altogether. If you are involved in a place where the competition is tight, then chances are your products on the other end may not be under the same amount of competition. It therefore means that you are able to diversify business risks.
it Results Into a Larger Turnover
Franchising has in the past received a lot of attention and if well done it can lead to growing your brand name into unimaginable heights. You may have witnessed some huge brands which have already managed to use this formula throughout the world and have become a huge success. It leads to more product sales and recognition of your trademark and logos all over the world. It therefore makes your products easily recognizable and widely accepted in the market.
it is a Form of Marketing
As your business gets franchised and gets established in other parts of the world it becomes a recognizable brand. The brand markets itself in other places leading to huge establishments which work under the management skills you have formulated. In return the sales volumes increase and more investors wanting to take the brand further.
you get Time to Improve Your Product and Services
As your business grows and spreads it wings to different parts of the world through franchising, you spend less time marketing your goods and services and start working towards improving your products. You may even go ahead and introduce other products and services that will complement your products or offer different choices for your customers. For example if your product is a soft drink, you may introduce other flavors so that your consumers have more variety under their favorite brand name. This is something the transport recruitment company Driver Hire did, developing a driver licence checking service, having franchised out its original recruitment service to various places around the UK.
Creates Long Lasting Business Relationships
As more and more franchisees get involved in your business you get involved in mutual agreements that last long for the purposes of good business. Good relationships are rewarding in the long run to both the franchisor and the franchisee: there is agreement when it comes to marketing strategies and it is relatively easy to implement changes whenever necessary. This helps in maintaining consistency of products and services in the market.