Why Franchise Internationally?
Below are some of the reasons why so many businesses choose this route:
- You Do Not Have to be a Franchisor Already
- Local Knowledge
- Rapid Growth
- Increase the Value of Your Business
- De-Risking Your Business
You Do Not Have to be a Franchisor Already
Using a franchise model, you actually get paid to expand into a new market. Master franchisees will pay you for the right to use your brand and operating system in their territory. In addition, there are few surprises or hidden costs because your business model is now that of a franchisor and your only task is to train and support your master franchisee. It is your franchisee that has to deal with the variables involved in setting up a clone of your business in their market.
Increase in the Value of Your Business
De-Risking Your Business
One is that by choosing a franchising strategy, your chosen partner will shoulder most of the risk of developing your brand in their territory. They are introducing their capital and devoting their time and effort in developing the business.
The other is something funds and private equity have cottoned on to. If you wholly own a multi site business and, due to external factors such as a downturn in the economy, revenues fall, some of those trading units may become loss making and even threaten the survival of your business. On the other hand, if that same network is franchised, you are cushioned from the effects of the downturn.
Your revenue is typically based on the revenue, not profit, of your franchisees. So even if you have some loss making franchisees, you can still be generating revenue and profits from your network. Which by the way, is why so few franchise systems fail during recessions in comparison to wholly owned networks.