This image has an empty alt attribute; its file name is frachising.jpgNow that you have established a business model that is proving to be successful, what`s next? Usually, the next stage for most businesses would be to replicate that model elsewhere and then go again, and then again, and again, until they have built a chain of stores.

However, business growth takes many different forms. One way would be to do it as described above that is, repeating the business model over and over again.

Another way would be to go and take over business rivals in order to build and expand your business empire. However, there is another way, that you could grow your business brand. That method of business growth is Franchising.

So what is, Franchising?

When a business is doing well and has built a good name, other people will want to share that success by adopting that business model in their own businesses and using that successful brand`s name and trademarks, for a fee.  The scholastic definition of Franchising is therefore that:

A Franchise is a privilege or right that an organization gives to another, to use its trademark or trade-name as well as certain business systems and processes to produce and sell goods and services, for an agreed fee.

A good and well-known example of a franchise is the fast food outlet, McDonald.

So why would people want to enter into a franchise?

We can look at the advantages of franchising from two standpoints, the Franchiser`s standpoint and that of the Franchisee. Let us, therefore, discuss them in turn.

The Franchisee

The franchise is the one who buys the right to use another business`s trademarks, systems, and products.

Instant brand recognition

The biggest advantage of buying a Franchise is that you will enjoy instant recognition and trust. You will be operating under a Business banner which people recognize and are comfortable with, and so your business will automatically gather pace from the onset.

With some brands, there is even a sense of pride that customers associate with them, and so if you are a franchisee of such brands you too can tap into this association.

Ready Market

By buying into a franchise whose market has already been proven, you save yourself the trouble of having to conduct market research to identify if there is, in fact, a market for the products. You will be buying the right to previous researches that have been conducted by the Franchise to identify their target market.

Proven products

Your products will have been tried and tested on the market and been proven to work properly. You won`t have to worry about coming up with your own products because your Franchise will provide you with all the products you will need to sell.

If the Franchise introduces new products, then it is their responsibility to promote those products to the public

Proven business delivery systems

Franchisees also get to benefit from proven business delivery systems. Big Franchises spend a lot of money on expert researches about efficient business methods and systems.

Therefore you can also get to enjoy effective business systems that result from such researches and hence giving yourself the best chance of achieving business success.

Business Training and Support

Big franchises have a big reputation to maintain and so will want you to run your Franchise according to set service delivery standards, so as to protect the brand`s image. Therefore they will provide business training and support to Franchise owners so that they are well equipped to run their businesses properly.

Big Advertising Budget

As a franchise, you won`t have to do your own marketing. Marketing is done by the Franchise and it is their responsibility to make sure that there is widespread brand awareness.

Big Franchises have the advantage of a big marketing budget and they can advertise during prime time TV viewing. Your responsibility is to deal with the customers when they come into your business.

All the heavy lifting of influencing people to come to your store is the responsibility of the brand owners.

Business Protection

Your franchiser will protect your business interests by not issuing franchise licenses to other people so they can open near your business. That means you can enjoy the benefit of being the exclusive franchise operator within a specified area.

Disadvantages

The main disadvantage of a franchise is that it eliminates the franchisee`s own innovation and creativity. Basically, you are told the range of products to sell, how to sell them and where to sell them from.

The franchiser reserves the right to design everything about the business and how it operates. That means your own entrepreneurial creativity is completely frozen out.

The Franchiser

This image has an empty alt attribute; its file name is frachiser.png

The franchiser is the organization that sells the right and privilege to use its brand, trademarks, name, products, and operational systems, to another.

So why does a business become a Franchiser?

Being a franchiser is the easiest and fastest way to grow a business. It is also the most cost-effective way to increase brand presence in different locations. By allowing franchisees to use their brand name for a fee, they are actually charging people to grow their brand further.

As you will find out later, brand in itself is a huge asset and so if someone pays money to use it, they are in effect paying money to grow the brand, hence increasing its value. It`s like a person saying to you:

I will pay you to build your house for you.

Even the products sold by the franchisee are that of the franchiser. That means that the franchise acts as a distribution channel of the franchise owner.

However, the biggest disadvantage to the Franchiser is that his success depends on the success of the franchise. His reputation is placed in the hands of the franchisee and if they do not provide good services, then it is the brand owner whose reputation suffers.

So what growth model should I adopt?

Well, it all depends upon you and your ambitions. If you choose to buy into a franchise though, you must remember that you will no longer be able to run your business your own way. Everything will be stipulated by your franchiser.

If on the other hand, you have proven a business model, you may be thinking of becoming a franchiser instead. If that is the case then you will need to apply for a special license that authorizes you to become a Franchise. Once you are granted that license, then the world is your oyster

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