You are currently viewing Franchising: A Loyalty Trade Business

Franchising: A Loyalty Trade Business

Businesses have been outgrowing numerous other volatile jobs worldwide. Be it small or large, the profit reaped from any business is gigantic. The base of any good business is the market support it needs and has. For any business to flourish as smoothly and get the recognition it desires, it should be willing to cross national borders. The ecstatic numbers of opportunities presented to one’s business in this day and age are phenomenal. Although the chances for growth are plenty, the most full proof plan all businesses seem to have adopted is that of Franchising.
Technically speaking, Franchising is that aspect of e-commerce and trade that allows any willing individual to purchase a branch of the original business, functioning under the same brand name and signing a lease or an agreement for the same. This sort of trade agreement provides substantial benefits for the both the mother company and the franchisee.
Speaking of the Franchiser, the fortune he receives are as follows:

  1. Capital Redeployment

The sale factor the company owned franchisee allows the associated franchiser to liquidate the investments. These assets could then be redeployed to high priority users.

  1. Equity returns

A franchisee is owned by the company and hence the franchiser investment is reduced. The profit is gained from the revenue stream royalties that usually result in higher returns for the franchiser.

  1. Income stability

The revenue stream for the franchisee will change and hence result in better assured and stable source of earnings for the Franchiser. Franchisees generally remit the royalty payments to their franchisers. The gross sales and the overall profitability of the business draw in the added revenue stream for the investor. This income is irrelevant of the fact whether the business is highly profitable or marginally profitable.

  1. Refranchising Growth

Refranchising a said franchisee is a great idea in terms of market growth and development. This could locate the franchisees in various different locations and allow operation of the business more fluently and efficiently.
Speaking of the benefits to the company:

  1. Development speeds up

The ultimate growth for a company is that of its franchisee. The time, cost and training cost that was put into the establishment of the company, is reduced multiple folds in a franchisee. As a franchisee is handled by an expert in the field, this provides as a cut-cost solution.

  1. Investment certainty increases

When the company has a reputation and is acknowledged by its customers, the franchisee is greeted with open arms. The investors and buyers have the affirmation of the legitimacy of the said company and do not hesitate while entering an agreement. This negates the aspect of any guesswork in the matter of sales and profitability. When the customers are confident about one’s brand, they tend to not question your methods.
Last but not the least, these franchisees maximise the chances of financing and drawing prospects. The company has a history and has marked its name and location and this draws all the potential investors and lenders towards it. Not just these, the franchisee could receive several trade opportunities that the company may or may not consider looking into, but would put the branch out in the market. This also facilitates leveraging of the franchisee to obtain economic scale growth. Franchisee business is contagious with infinite scope for refranchising.