Blog · February 4, 2022

7 Benefits of Franchising Your Company

If you feel like the time has come for your business to grow, you might be wondering if turning to a franchise business model could be a good idea. You have to know that franchising a company is not for everyone. Developing your franchise model, preparing a franchise agreement, creating training materials for your franchisees, and recruiting those franchisees represent an important investment of both time and money.

That being said, if you get started on the right foot, franchising your company can be a wonderful way to expand and reach more people with your products or services. Let’s take a look at the seven benefits of franchising your company.

Benefit #1: You can grow your company with someone else’s capital.

You already know that starting a company requires a lot of capital. Expanding a business is also an expensive venture. If you want to grow your company, but also want to avoid getting into debt, franchising is a good option for you. A benefit of franchising your company is the financial support. It allows you to expand by using someone else’s capital instead of your own.

Your franchisees will be the ones who will have to pay to open and operate your franchise units, so you will be able to use your own money for other projects if you want to.

Benefit #2: You can compete with larger businesses to reach new markets.

When you own a small company, it might seem impossible to compete with larger businesses. After all, they have more capital and more resources than you do.

No one wants to see someone else succeed with the same concept. When you franchise your company and recruit enough franchisees to open many units, you will be able to compete with large businesses. You can reach new markets with your products or services. Plus, you can even saturate the market before your competitors have a chance to do it.

Benefit #3: You face fewer risks than opening a new location.

As we have previously mentioned, you will not have to invest your capital in opening multiple franchise units. This means that franchising your company will not be a risky venture for you.

Each franchisee will be responsible for leasing their unit’s location, acquiring their equipment and inventory, hiring their employees, and investing in their daily operations. Your franchisees will be the ones taking risks, and as their franchisor, you will probably invest a lot less capital than if you were opening just one more location on your own.

Benefit #4: Your franchisees will be fully invested in their success.

Turning to the franchise is as simple as searching for the right people to join your team. If you were opening a new location on your own, you would also need to find, hire and train a good unit manager. But since this manager will not have invested their own money into this project, they might not be too concerned about whether their unit is successful or not.

But if you recruit franchisees instead, you will be building a team of highly motivated entrepreneurs to help you grow your business. Since your franchisees will own their unit locations, they will fully invest in their success.

Their long-term commitment and passion will make a difference in how successful your expanding company will be. For even more business security, consult with a franchise lawyer and ensure all your legal proceedings are safeguarded.

Benefit #5: You will enter markets you might have never considered.

Franchising can make it possible for you to enter some markets you might have never considered otherwise. An entrepreneur living in another region, or perhaps even another country, could be interested in opening one of your franchises in their community.

Knowing their local market will operate their franchise unit efficiently, allowing you to reach customers in areas that might not have been on your priority list.

Benefit #6: You won’t have to manage each of your franchise units.

As a franchisor, you don’t have to manage your franchise locations. Your franchisees will be responsible for hiring and training their employees, making their schedules, creating their payroll system, and supervising their unit’s daily operations.

If an employee is ill and can’t show up for work for some time, the franchisee will be the one who will need to come up with a solution to replace them quickly. If a customer has a complaint, they will address it to the franchisee and not to you.

Your role is to provide them with your franchise model and the training and support they need to get started on the right foot.

Benefit #7: Your company can become a lot more profitable.

All those benefits of franchising your company make it possible for you to operate your business profitably. You will rely on your franchisees’ capital to expand, and you won’t have to face as many risks as if you were opening more locations instead of choosing to franchise your company.

If you recruit highly motivated franchisees, you are almost guaranteed to see a fast return on your investment.