Alternative Ways to Expand Your Business Besides Franchising
- 1. Expanding Your Operations Yourself
- 2. Licensing/Biz Opps
- 3. Licensing Your Trademark
- 4. Distributing Your Product As A Wholesaler
- 5. Agency
- 6. Partnerships/Joint Ventures
- Company-Owned Operations. The most obvious expansion method for many companies is the development of additional company-owned outlets. ...
- Business Opportunities or Licensing. ...
- Trademark Licenses. ...
- Dealerships and Distributorships. ...
- Agency Relationships. ...
- Joint Venture.
What is an alternative to franchising?
Licensing Ownerships In a licensing arrangement, a licensee pays for the rights to use your trademark. Unlike the control you would have over a franchise, your licensees run their businesses independently.
Is franchising the best way to expand?
If you've got a great business and looking to expand it further, creating a franchise will be the best option. Many businesses today increase their market share and expand across new areas by creating a franchise. Franchise establishments are set to grow by 1.9 percent in recent years.
What is better than a franchise?
Startup: The Pros With startup costs that could be as low as $10,000, having your own business—whether full-time or part-time, in your basement, your garage, or even out of the trunk of your car—is significantly less expensive than the costs associated with many franchises.
Is it better to be a franchise or independent?
An independent business is a good choice. But if the time and effort seem daunting or time-consuming, a franchise may be the better choice. Most of the development is already done. Franchises are turn-key businesses.
What are the disadvantages of franchising?
There are 5 main disadvantages to buying a franchise:1 - Costs and Fees. ... 2 – Lack of Independence. ... 3 – Guilt by Association. ... 4 – Limited Growth Potential. ... 5 – Restrictive franchise agreements.
How can I grow my business?
Although growing your small business will take time and energy, there are 10 strategies you can use to help accelerate business growth.Do Your Research. ... Build a Sales Funnel. ... Increase Customer Retention. ... Participate in Networking Events. ... Practice Corporate Social Responsibility. ... Form Strategic Partnerships.More items...
Should I franchise or not?
You should only franchise if it is a part of your long-term growth strategy and goals. Only franchise if your goal is to expand your brand and to build an organization to support and assist your future franchisees.
What other ways can a business expand its operations other than franchising?
Beyond Franchising: 6 Ways to Expand Your BusinessCompany-Owned Operations. The most obvious expansion method for many companies is the development of additional company-owned outlets. ... Business Opportunities or Licensing. ... Trademark Licenses. ... Dealerships and Distributorships. ... Agency Relationships. ... Joint Venture.
How many franchises fail each year?
9) CurvesYearFailuresFailure Rate201729447.7%201819847.4%201912337.8%Total 3-year (2017-2019)615189.2%
Why do most franchises fail?
A leading cause of a franchisee failure is the franchisee being undercapitalized. A lack of sufficient working capital can be the result of a slow start-up or the franchise operation requiring more working capital than the amount disclosed in the franchise disclosure document.
What is the failure rate of a franchise business?
Pretty much every year the survey has been conducted has shown between 8-12% of franchise businesses left their franchise each year. This is for a variety of reasons, including retirement, selling, ill-health and financial failure.
Can a franchise owner be fired?
While franchisees are not technically employees of a franchise brand, they can be “fired” by franchisors, who reserve the right to terminate their contract “for cause.” This involves ending the relationship based upon a default under the franchise agreement.
Why franchising is good for expansion?
The primary reason most entrepreneurs turn to franchising is that it allows them to expand without the risk of debt or the cost of equity. First, since the franchisee provides all the capital required to open and operate a unit, it allows companies to grow using the resources of others.
Why is franchising the best option?
Easier management - the franchisees also run their businesses therefore reducing the management demands placed on you. The best franchisees will be highly motivated and have local expertise, making your life much easier. Develop your brand - the more franchisees you have the better known your brand becomes.
What is the advantage of franchising?
One of the many benefits of franchising is increased brand awareness. The more locations the brand has, the more people who are aware of the brand. And the more these customers come to know and love the brand, the more profitable and successful the brand can be.
Why is franchising a popular way to expand distribution of an effective service concept?
Franchising offers them the opportunity to expand quickly into new markets without having to set up and manage their own branch systems. Franchising is therefore also regarded as an efficient, low risk form of internationalization for good reason.
1. Add More Units
Some of the most resoundingly successful people in this country are multi-unit franchise owners. Your franchisor already has a proven system of duplication that allowed them to help franchise owners build businesses from one end of the country to the other. Why not emulate it on a smaller scale to create your own empire?
2. Become a Top-Producing Franchisee
Many franchisors sponsor contests where they award top-producing franchise owners. By pouring your heart and soul into everything you do, you'll have a good shot at becoming one of these high achievers. This will get you recognition on a national scale and a bevy of new customers eager to buy what you're selling.
3. Help Your Franchisor Grow
Your franchisor will help you grow if you help them grow. As you help your franchisor supercharge their success, they may recognize your initiative and provide you with more support and resources to grow your own business.
4. Join the Owner's Advisory Committee
Many franchisors have advisory committees to facilitate communication and participation between the corporate team and the franchise community. By participating in the committee, you'll get a voice and an opportunity to influence company direction. These efforts have immense potential to positively affect your business.
5. Take Advantage of Leadership Opportunities
As you grow your franchise business and headquarters takes notice of your success, you might find yourself being offered leadership opportunities within the organization. Speaking to your peers, mentoring new and potential franchise owners, and more can help you to establish yourself and your business within the community.
6. Strategically Use Financing
Any business owner will tell you that growing costs money. That's simply the nature of the game. The good news is that there are ways to use financing strategically as you expand your franchise business.
7. Prepare for Growth
When you own more than two or three locations, you're going to need to be able to hire people who can help you oversee operations. This means it's time to reassess your strengths and weaknesses so you can delegate and play to your strengths.
Company-Owned Operations
- The most obvious expansion method for many companies is the development of additional company-owned outlets. This strategy offers several advantages over franchising. Perhaps most important, company-owned growth allows owners to keep 100 percent of each unit's profits rather than sharing those profits with franchisees. It also offers increased cont...
Business Opportunities Or Licensing
- The advantage to the business opportunity (biz opp) route is that in many cases, the licensor doesn't have to comply with the FTC's franchise disclosure regulations, which saves money and makes the sales process less complex. That said, a biz opp may still have to comply with franchise disclosure laws in some states and will need to comply with the patchwork quilt of biz …
Trademark Licenses
- The second option available to those looking to expand through third parties is the use of a trademark license. For those of us without famous names, trademark licenses are exceptionally difficult to market—especially if we're branding a business instead of a product. After all, if someone is going into a business, it's the system of operation -- the recipes, the advertising, the …
Dealerships and Distributorships
- This format involves the provision of products to a third party at a bona fide wholesale price for resale, a tried-and-true means of establishing a distribution channel. Of course, this method is only appropriate for manufacturers and wholesalers. But be careful: Selling equipment, displays, and other items that aren't intended for resale-- even if not sold at a profit -- will trigger the fee eleme…
Agency Relationships
- In an agency structure, an independent salesperson sells a service on your behalf -- so again, this form of relationship is only appropriate for companies for which fulfillment of the contract is provided by the corporation and not by the agent. The easy distinction here is that all money flows downward (from corporate to the agent) and not upward (from the franchisee to the franchisor)…
Joint Venture
- A joint venture partnership is characterized not by fees but by sharing both equity and profits. So, for example, your joint venture partner might put up 70 percent of the money and work at a salary that was below market for one year. You'd put up 30 percent of the capital, sign personally on a bank note, and provide your intellectual property. Based on your negotiations, you might end up i…