Episode 12 - The Benefits of Franchising

Fairmont Rainmakers

CAPITAL The franchisor’s capital requirements will be lower because the franchisees provide the capital to open each franchised outlet. MOTIVATED AND EFFECTIVE MANAGEMENT The local management of each franchised unit will be highly motivated and very effective. They treat the franchise units as their own and that will usually lead to higher sales and profit levels. FEWER EMPLOYEES The number of employees which a franchisor needs to operate a franchise network is much smaller than they would need to run a network of company owned units. SPEED OF GROWTH The franchise network can grow as fast as the franchisor can develop its infrastructure to recruit, train and support its franchisees. REDUCED INVOLVEMENT IN DAY-TO-DAY OPERATIONS The franchisor will not be involved in the day-to-day operations of each franchised outlet. LIMITED RISKS AND LIABILITY The franchisor will not risk its capital and will not have to sign lease agreements, employment agreements, etc. INCREASING BRAND EQUITY Levereging off the assets of franchisees helps franchisors grow their market share and brand equity more quickly and effectively. ADVERTISING AND PROMOTION Franchisor will reach the target customer more effectively through co-operative advertising and promotion initiatives. CUSTOMER LOYALTY Franchisors use the power of franchising as a system to build customer loyalty- to attract more customers and to keep them. INTERNATIONAL EXPANSION International expansion is easier and faster, since the franchisee posesses the local market knowledge.