Business Franchise Examples
business franchise examples
The Advantages of Business Franchising
If you are looking to start a business using the franchising model, then there are certainly lots that you have to consider before hand. It’s also, probably, wise to consider consulting with a suitably qualified specialist. Franchising is a model used by many large businesses, including Subway and McDonald’s, which has inevitably contributed towards their rapid expansion and global presence.
Doesn’t Dilute Equity
When you finance the growth of your business through franchising it allows the existing shareholders to maintain a greater share of equity within the firm. This means that going forward they can run the business in a way that they see fit, and capitalize on opportunities when they arise.
Scale Quicker
Your business will be able to scale much quicker when you opt for the franchising model. Each time you enter into new markets, and sell more franchises, your balance sheet will become stronger through franchising fees. This is in comparison to other businesses, where they will often have to heavily leverage their business or dilute equity to finance this.
Limit Losses
Dependant on the structure of your franchise agreement it is unlikely you will be able to make a gross loss from selling a franchise in any giving trading year. Most franchisees pay a yearly management fee to the franchisor, which is a percentage of revenue. This means even if one particular franchise is not profitable, this will not impact the business as negatively as it otherwise would. This makes the business far more stable, with more predictable earnings than most companies.
Well Managed
It is likely that each franchise will be well managed when the owner is so closely vested in its success. This allows for your business to worry about micro-managing less, and worry about long-term strategy more. It also means you will most likely have higher caliber management in place than you otherwise would.
Cannibalization Less Problematic
If two McDonald’s franchisees open restaurants near each other then it will probably benefit the parent company. Not only do they benefit from the initial fee from both companies, but they also benefit from the increased revenue brought by their wider reach.
Although this may benefit McDonald’s in this case, if they owned the stores directly they may find that they were competing against each other for the same business. This means that total revenue would be higher, but profitability would take a hit. With business franchising, your business becomes immune to this.
Encourage Efficiency
Through making the franchisee responsible, as directly as possible, for the costs that they bring to your business it’s possible to drive efficiency within your business in a way that wouldn’t otherwise be possible. If one franchisee is using up more head office resources than you would like, there expenses can reflect this.
Economies Of Scale
Because you will be able to reach critical mass much faster than you otherwise would, it means that expenses can be shared out among a larger organization. For example, when the business pays for a new product design everyone benefits. This makes the business more cost efficient.
About the Author
Looking for a franchise opportunity? For UK business franchises and internet franchise opportunities see our City Local franchises in UK cities. Work from home and be your own boss with the CityLocal franchise Opportunity.
will franchise owners buy land & build property then lease back to new franchisee?
If I were to purchase a gym franchise, would the owner of the franchise ever consider buying land and building property, then leasing it back to me as the new franchisee? For example: there are no suitable venues for a new gym in the suburb i wish to start one, and it would be too expensive for me as a first time business owner to buy land and build, so do franchise owners ever buy property, build the venue then lease back to the franchisee??
Fuel companies like Chevron, Shell, and Exxon do this.
If you have good credit, some decent liquidity, and a good business plan, a Fitness Franchise or a property developer should consider such business development. Otherwise, you might need to bring in other partners.
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Peak: How Great Companies Get Their Mojo from Maslow $13.99 After fifteen years of rising to the pinnacle of the hospitality industry, Chip Conley’s company was suddenly undercapitalized and overexposed in the post-dot.com, post-9/11 economy. For relief and inspiration, Conley, the CEO and founder of Joie de Vivre Hospitality, turned to psychologist Abraham Maslow’s iconic Hierarchy of Needs. This book explores how Conley’s company “the second largest bout… |
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Start a Cupcake Business Today $9.99 Our cupcake business guide combines the business know-how with the practical advice you need to open your business quickly.There’s never been a better time to start up a cupcake business. This is a great opportunity for anyone who is passionate about cupcakes, creative in spirit, and looking for an outlet to realize their dream…Wherever you are in your entrepreneurial aspirations, this book will… |
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Forces for Good: The Six Practices of High-Impact Nonprofits (J-B US non-Franchise Leadership) $12.90 Authors: Leslie Crutchfield, Heather McLeod Grant ISBN: 9780787986124, Hardcover, 336 pages, October 2007 An innovative guide to how great nonprofits achieve extraordinary social impact. What makes great nonprofits great? Authors Crutchfield and McLeod Grant searched for the answer over several years, employing a rigorous research methodology which derived from books on for-profits like Built to L… |
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Franchise Restaurant Business Plan Bundle $39.95 This bundle offers you everything you need including a sample franchise restaurant plan, business plan template to quickly create, edit, and print an professional formatted business plan, step-by-step business plan guide to walk you through the processes of creating a business plan one step at a time, A business plan presentation template, financial statement worksheets covering cash flow, profit … |
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Examples of Isomerism $59.99 Edward L. Youmans Examples of Isomerism – Wall Decal |
