Expansion is the only way a business can grow. Franchising is one of the instruments that helps you expand to a greater scale and increases the profitability of your company. Commencing a business is the first step in the entire process. There are three important elements that you need to decide on while starting your business: market place, quality of service or product and staff who is selling your business. However, most important thing is to run a business which will build upon the operational process which you need to build in to the business and also to implement the same on a day to day basis.
As an entrepreneur you may do a good job in setting up an excellent operations process in your business but implementing the same on a daily basis in different outlets would require a lot of involvement. For instance, till the time Mr. Sharma had 3-4 chinese food outlets, it was easier for him to handle them directly with co-operation from his store staff but once the number of stores went up it became very intricate to handle them on a daily basis. This is one of the salient reasons for you to franchise your business.
Mr. Sharma may have with him Rs. 1 crore but it would probably take around 20 lakhs to open a Chinese food outlet. Hence, with this limited fund he can open 5 stores but his idea may have the potential to become one of the largest chains of Chinese food counter across the country. Franchising will allow him to do so as he will come across hundreds of people who are looking for such opportunities. For Mr. Sharma it would cost him 20 crores to open hundred stores but for the hundred interested people, it is just a matter of investing Rs. 20 lakhs each. In this case, both the parties bring in their strength. Mr. Sharma brings in his expertise and brand name while the hundred other people bring in their finances required to commence this outlet. Thus, money becomes the second important reason for franchising your business.
Setting up a franchise unit takes enough time as you need to make sure that every aspect has been taken care of. Franchisee plays a very important role of setting up the store unit under the guidelines provided by the franchisor. Thus, a franchisor saves on a lot of time and can concentrate on setting up multiple outlets at the same time. Once the franchise unit has been set up after that handling store on a day to day basis is the franchisees task and the franchisor can be more like a supervisor. This allows franchisor to focus on multiple outlets as the same time. In short, the pace at which Mr. Sharma can open these outlets is very quick as he has hundred partners to expand his business now. Therefore, time becomes your third important reason for franchising your business.
Being an entrepreneur, franchisee may also come up with certain ideas which might be beneficial for your business model. Better brainstorming means better ideas which leads to more money, increased creativity, better relations, creating new markets and so on.
Clicktofranchise has been providing new business ideas through the way of franchising.