Operations – Franchising Opportunities

One of the main hopes of opening a restaurant operation is that it becomes successful enough to expand either the original business, or to create additional locations.  If you have been fortunate enough to see this success with your operation then you are on the cusp of another organizational choice – franchising.  Although there are many reasons that operators choose to franchise.  Here are the top five:

  1.  Franchising provides you with the immediate resources needed to expand.  Your franchisees will put the upfront capital and in turn benefit from the brand that you have created.  The business has already been proven to work; expanding s the next logical step.
  2. By franchising your restaurant, your organization and brand are able to grow faster than it would if you were opening single stores on your own.
  3. The franchisee takes the responsibility off of your shoulders in terms of human resources.  The franchisee has to hire staff at each location, do payroll, purchasing, etc.  They also often help with finding a suitable location that will deliver traffic.
  4. Franchising will provide the speed to market necessary to join the space and be competitive in your marketplace.
  5. Franchisors have an open path to exit by selling the company or even going public, whereas a small company owned system usually has fewer options.

Franchising is a lot of work up front, starting with the legal documents, disclosures and agreements, financial statements, and detailed operations and marketing materials.  But the payoff can be worth it in the end.

While there are costs associated with putting together a franchise program, the potential  opportunities for marketing on a large scale can be very tempting for the risk-taking entrepreneur.

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