Expanding your Business: Is Franchising an Option?

Date: 05/08/2017

According to Investopedia.com the definition of “franchise is a type of license that a party (franchisee) acquires to allow them to have access to a business's (the franchiser) proprietary knowledge, processes and trademarks in order to allow the party to sell a product or provide a service under the business's name. In exchange for gaining the franchise, the franchisee usually pays the franchisor initial start-up and annual licensing fees.”

Large corporations may spring to mind with the concept of franchising, however, the difference between a small company and a franchise is the agreement governing the relationship between the company and the head office.  The size of a business is based on number of employees, number of locations with the same owner, revenues and other considerations. If you are the owner of a successful business; you may have already considered opening additional locations and questioned the prospect of franchising as an option to grow.  Massage Envy is a case study that franchised with only one single unit in operation and today has over a 1000 locations.  Lack of capital can be one barrier to opening a second or additional locations. Franchising allows companies to expand with less capital, since franchisees provide the initial investment at the unit level, signs the lease and commits to various service contracts.  Another barrier to expansion can be finding trusted talent to consistently uphold your business reputation etc.  Franchising also naturally leads to finding talented and motivated people from within the company or business to manage additional locations.  The franchisee has both an investment in the unit and a stake in the profits, so incentive is built-in to increase performance and uphold the brand and quality of the business.
Nearly any type of business can be franchised, however, certain criteria should be considered before going with this option.  Does your business have a proven track record that is marketable as a business opportunity with adequate returns of at least 15% return on investment? Royalty fees for franchisees are typically between 4% and 8%.   Are operating procedures documented and teachable? 

Franchise Forecast for 2017

The franchise industry is expected to expand by 1.6% in 2017, an increase of over 11,500 establishments.  Positive consumer spending trends, roll back labor regulations and employment growth are contributing factors to this expected seventh consecutive year of growth.  Employment is set to expand by 3.3 percent to 7.8 million workers, adding 250,000 new jobs, according to the annual Franchise Business Economic Outlook report. And the GDP of the industry is set to increase by 5.2 percent to an estimated $426 billion from last year's $405 billion. – Source: IFA (International Franchise Association)

Top Five Franchises by Establishment Growth 2017

1. Personal Services: 2.3%
2. Quick Service Restaurants: 1.9%
3. Table/Full Service Restaurants: 1.9%
4. Retail Products and Services: 1.7%
5. Business Services: 1.5%

Expand your Business with MyCompanyTrader

Franchising is one way to expand your business that involves the services of trusted professionals.  MyCompanyTrader was founded on the belief that establishing trust is the most significant component of relationship building that can lead to completed deals and future business.  It will seek to reward those who uphold trust by posting success stories and testimonials.  Competition for recognition of your listings and services are increasing with advances in technology. Linking our connections and relationships brings more opportunities. MyCompanyTrader’s user-friendly and secure service connects buyers with sellers, business brokers, commercial realtors and other professionals involved in a sale including accountants, appraisers, architects, broker agents, business attorneys, designers, insurance agents, real estate agents and financial advisors.   MyCompanyTrader is launching this new service by offering the first, three months for free with no risk and the ability to cancel anytime. Start your Free 90-day-trial with the code: TRADER90.  One sign-up gives you Free Advertising for three months with exposure on multiple social media outlets and the opportunity to choose links to websites, contact information and valuable opportunities to post photos and get more deals done. Bonus offers and success stories will be offered to early members…so share, network, connect and join MyCompanyTrader.com today!


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