Top Reasons To Consider Franchising Your Business

Are you a business owner? Is your franchise looking to expand? Or are you on the fence about whether or not to expand the franchise? If your answer is a yes to any of these questions then you are in luck. Franchising a business can have great benefits for any business. In this blog piece, we shall look at the top reasons to consider growing franchise. If you want to get more details about franchises looking to expand, you may visit on https://kellywm.com/how-to-grow-your-franchise-business/.

❖ Brand Scaling

As a business owner, brand growth is a great motivation. Franchises looking to expand are a great way to scale any brand. Franchising allows Franchises looking to expand to invest minimal funds into opening new stores. The franchising system allows any brand to license its brand through trade mark and operations manual. Opening new stores do allow the franchisor to increase its brand popularity.

❖ Better market power

As mentioned earlier, Franchises looking to expand are a great way to scale any brand. It also does help to increase the brand’s market power. As the Franchises looking to expand get to enjoy brand scaling, market power comes into play because of the increased number of brand stores. Additionally, better market power means the business does get to enjoy better negotiations with suppliers and distribution entities. Furthermore, better market power means that businesses can set competitive prices and be a trendsetter.

❖ Increase valuation

For some franchises looking to expand, they tend to do so with the main aim of selling the business. Franchises tend to have better and high valuations as compared to any business without franchises. Franchises looking to expand tend to have higher valuations because of increased market power and brand popularity.

❖ Additional income

One of the main reasons why Franchises looking to expand decide to go for franchising is because of the ability to increase income for the franchisor. Even though franchising is a low-cost expansion strategy the franchisor also gets to enjoy royalties. In most franchise agreements, the royalties can range start from 5 % to 15 % of the total gross sales.

❖ Reduce chances of business failure

The business world is highly competitive and 65% of new businesses tend to fail within the first two years. While 90 % of new businesses tend to fail within the first five years. However, Franchises looking to expand tend to have smaller failure rates standing at 2% to 5%. Franchises looking to expand tend to have a lower failure rate because of the use of successful business models and they tend to enjoy increased popularity.

❖ Franchises looking to expand enjoy economies of scale

As mentioned earlier the business world is highly competitive. For any business to stay ahead of the rest they have to use the available tools present to them. One of those tools is economies of scale which Franchises looking to expand get to exploit. In regards to economies of scale, franchises can buy goods in bulk at cheaper rates which in the long run does help to reduce business operating expenses.