Franchising
Franchising is the term given
to the practise of using another persons business model or method. In
most cases franchising is associated with the running and expansion of
a business opportunity but in some cases and especially in America, it
also refers to railways, sports teams, computer games and movies. In
fact, they would refer to the next instalment of the Harry Potter
series as the next franchise.
Traditionally however and over here in the UK, franchising is where a
company expands their business by offering the systems to run that
business, for sale to another person. These systems will typically
include the marketing materials, a franchise manual, use of the company
logo, slogans and brand image associated with the company and
everything else needed to "clone" an already successful business to
another area or territory either nationally or internationally.
Franchising first came to prominence in the early part of the 19th
century, Isaac Singer is widely regarded as one of the first people to
embrace this method of business expansion with his Singer sewing
machines, using the franchising model to further his distribution
efforts. It is obvious however that on a smaller and less known scale
there will have been many smaller brands throughout the 1800's and
early 1900's that will have used a similar system but on a smaller scale and without so much
recognition as Mr Singer.
Advantages for a business to go down the franchising route are those of
venture capital. A business looking to expand needs to secure the
monies needed and usually the price to pay for this is a share in their
company, however when franchising it is possible to secure funding for
expansion by selling the business model wrapped in a tight licensing
agreement. This licensing agreement gives the franchisor a level of
control over the newly set up business whilst also funding the setting
up and marketing needed to ensure it's success.
Another advantage in franchising your business is one of motivation, it
could be said that a person working in gainful employment may have less
motivation than the one owning the company, as a franchisee you are set
to earn more the better the company performs, as an employee it is
likely your income is relatively static so the onus is on the
franchisee to ensure the success of the franchised business and profits
will be higher the more successful the business is.
For the franchisee a huge advantage is being supplied with a working
business model, all the hardship of researching the local area and
starting out with a fresh business has been done by the franchisor and they are are handed a
"business on a plate" with all the relevant research done, marketing
materials in place and brand image created. They are also given all the
support needed and benefit from ongoing market research and national marketing.
If you need any one on one help with choosing the right franchise or
franchising your business then we are here to help, either pop me an
email at matthew @ the-franchise-shop.com or pick up the phone and give
me a ring on 01542 810389. We are here most days and are always happy
to help.
