Why Franchise Models Are So Popular

With franchise output over 700 billion dollars in 2017 alone, it’s no surprise that this industry is expected to continue to grow. McDonald’s, RE/MAX, and Hertz Car Rentals are all examples of extremely successful franchises. Franchising isn’t just for big businesses. Even a small business can use a franchise model to expand their business.

What is a Franchise?

According to Entrepreneur.com, a franchise is “a license, or permission to use the name and products of an existing business, as well as the trademark.” When you start using a franchise model with your business, you become known as the franchisor with the person getting permission to use your brand is the franchisee. There are some unique benefits for both the franchisor and the franchisee.

Benefits for Franchisees

The biggest benefit to franchisees is that they’re able to start their own business with a proven brand that has an established structure in place. They also benefit from ongoing support with marketing, sales, and business development.

Because of that, many people who want to start their own business look into franchising an existing business. Once they find success with one business, they can continue to expand and open additional franchises with the same company.

Benefits for Franchisors

Franchisors benefit from opening up their business as a franchise in a number of ways. First and foremost, it offers them the opportunity to expand their reach, grow their customer base, and increase their bottom line with little financial risk or extra effort.

When a franchisee opens a new business, the majority of the financial burden and work required to starting a business is on them. That frees up the franchisor to focus their efforts on finding good franchisees that will help take their business to the next level.

A Symbiotic Relationship

Because this is a mutually-beneficial relationship, both parties can work together to ensure the success of each other. The franchisor provides training and support to the new business owner and their employees. In return, the franchisee pays a fee to use their name and products as well as an ongoing percentage of their sales.

It’s for this reason that franchise models are so popular for both small businesses looking to expand and for people who want to own their own business without having to build their own brand. By using a well-known brand, they cut out the arduous process it takes most businesses to establish themselves.

When a franchised business does well, everyone benefits. If the main store, for example, gets positive press, then the franchised branches will gain more business. Or, if the franchised stores offer incredible customer service, then the brand is seen more positively by customers.

How to Get Started with Franchising

If you are a small business owner and want to open your business up to become a franchise, then you can get started today. The first step will be starting the legal process to have contracts ready. A legal team will also be able to tell you everything else you’ll need to be able to get started.

Want to learn more about franchising and how it can work for you? Contact your local franchising legal team today!