FRANCHISING AS A MODE OF BUSINESS EXPANSION

1. FRANCHISING AS A MODE OF BUSINESS EXPANSION In an ever-changing and increasingly challenging global marketplace, franchising has shown great pliability and sustained continued advance despite the economic and political encounters presented over the past decades. If you run an efficacious company that proposes valuable products or services to consumers, you might want to open other locations to scope a grander audience. Not only will you gross a higher profit, but you'll also help countless novel customers while you shape your brand from a distance. Instead of owning and operating entire locations yourself, you can propose your business model as a franchise prospect and allow other painstaking entrepreneurs to run each institution under your brand name. Franchising has historically established to be a rather competent way of expanding the market saturation and consumer foundation of retail brands, both locally and transnationally. This is so because it permits the brand owner, the franchisor, to enlarge its business faster and with fewer financial and human-resource investments, while at the same time safeguarding the maintenance of the quality and operational canons of the brand, specifically when compared to other structures such as trademark licensing, agency and setting up a local lawful entity or joint venture with a local companion. www.frantastic.in 1

2. The benefits of franchising as a means of expanding a business are dual. One, it involves little capital investment by the franchisor as the principal used to expand the network comes from franchisees. Two, by franchising the business, the franchisor places the expansion of his/her business in the hands of folks who are driven to make it work. Having invested what in numerous cases are their life savings in a franchise, franchisees will endeavour to make the business efficacious. Their livelihood hinge on it. By using the franchisees' capital, the franchisor is able to find a large number of outlets in a brief period of time. Rapid expansion can be accomplished without incurring the overheads and costs accompanying with inaugural company-owned outlets. This fetch benefit to both the franchisor and franchisee as it helps shape consumer recognition swiftly and launch the franchise. The cost of expansion for the franchisor is generally restricted to the cost of franchisee recruitment, training and assistance preceding to opening. Franchisees capitalize their own equity and borrowed funds in premises, fixtures, equipment, furnishings, inventory and the working capital obligatory to establish a franchise unit. The only cost to the franchisor is that of the outlays not encountered by the franchisee's preliminary franchise fee. www.frantastic.in 2

3. HOW FRANCHISING HELPS TO EXPAND YOUR BUSINESS Franchising is a system for the constant, sustainable replication of a corporation’s brand. It is based on a contractual association between the franchisor and local franchisees who are accountable for independently managing their businesses to accomplish the brand standards recognized by the franchisor. Successful franchisors offer their franchisees with established business systems essential for them to grow and manage their businesses. Franchising is about the associations that the franchisor establishes with its franchisees. In a franchise, the franchisor licenses its craft name (it's brand) and its franchising functioning methods (its structure of doing business) to its franchisees. The franchisee autonomously operates and manages its business according to the www.frantastic.in 3

4. rapport of their contract (the Franchise Agreement) with the franchisor. The return on investment is considerably higher for businesses that enlarge through franchising. Because there is little capital employed, the franchisor's profits are engendered on a much lesser capital investment. Although the revenue from franchised units is fewer than that received from company-owned outlets, a higher percentage of the revenue is yield. Franchising also permits for the business to expand without scattering managerial resources across too many business units. A business owner may wish to keep his/her own operation trivial and tightly run. Operating more than a few outlets can trench business resources. A franchise system necessitates less management than a company owned a chain of outlets. Hiring, motivating, training, and retaining competent staffing are all functions handled by the franchisee, not the franchisor. Businesses choose to franchise as a means of expanding their enterprise because of the drive and energy of owner-operators and sometimes - specifically in the instance of small, one-person enterprises - because the service provided by the franchise is very challenging and needs the extra consideration of an owner- manager. The owner-manager is generally more motivated and active than a salaried manager because he or she has a bestowed interest in the business. Franchising has added magnetism for expanding a business into foreign markets predominantly those that are diverse, as most extraneous markets are, to the franchisor's home market. By using indigenous franchisees, the franchisor is tapping into local business knowledge which may attest beyond his or her competence to obtain otherwise. People who know the local scene well pact with legal and cultural variances more straightforwardly than an overseas company executive would. Whatever the advantages of expanding a business via franchising, but where there is business - there will be a risk. Successful businesses with appropriate concepts have botched to successfully franchise. Companies must meet certain standards before embarking on the franchise route. Even when they have encountered those criteria, potential franchisors must be to be equipped to invest both money and time in the expansion of the franchise system. While it has its advantages, it is not a simple means to expansion without proper expertise. Franchise leads to faster expansion If you’ve got a prodigious business and looking to expand it further, creating a franchise will be the greatest option. Many businesses today upsurge their market share and expand across new areas via creating a franchise. www.frantastic.in 4

5. According to experts, franchise establishments are set to rise by 1.9 per cent in topical years. The gross domestic product of the sector is projected to increase by 6.1 per cent to $451 billion. Franchise business output will also intensify by 6.2 per cent to $757 billion. Franchising offers a more cost-effective alternative to mounting a business. Franchising is all about imitating a clear and successful business recipe. Creating a franchise will boost start your expansion much faster than establishing company- owned units because of its pre-existing robust business foundation. Franchising allows companies to contest with much larger businesses so they can dowse markets before these companies can retort. Franchising is a win-win state for both the franchisees and franchisor. When opening a novel branch, you need to do many managerial works such as discovering a novel location, hiring staff etc. Whereas franchisees will take on this chore themselves. Thus, franchised networks can be expanded more swiftly than company-run networks which will ultimately help in making fast and more money. Moreover, the recognition of the brand across the world is added benefit. Conclusion If your business has longer-term ambitions to expand your business internationally, the franchise structure again has numerous advantages. An entrepreneur can take his brand to local investors who have prodigious neighbourhood level know-how and also to the international stratum of expansion. This is a very effective system of expanding a business overseas without any necessity to create subsidiary companies or branches in your selected countries. Becoming a franchise is the speediest, most effective, and, in maximum cases, the cost-effective way to enlarge a business, but the transformation of an autonomous business to a Franchise system is not so easy. It necessitates expertise and the proper approach. We at Frantastic serves our clients with the best opportunities to expand their business at national and international level at a lightning speed which will ultimately bring more money and brand recognition for you. www.frantastic.in 5