Franchising Comes With its Own Multiplier
Most franchise companies cater to the hands-on operator, who makes up the majority of franchisees. They are content to own and operate a single unit franchise, conserving labor costs and keeping a “finger on the pulse” of the business. However, growing businesses and creating market share are what franchising is all about and in today’s competitive market place, expansion opportunities are plentiful for franchisees whose dreams reach beyond single unit ownership. Nearly a quarter of all franchisees own more than one unit according to “Franchising in the Economy,” a study conducted by Arthur Andersen & Co.
"The most common growth strategy is the multi-unit franchisee who acquires one or more units at a time."
This type of expansion allows the franchisee greater control over operations and cost structure so the current business is not spread too thin too fast.
For financially capable franchisees with a lot of ambition, area development and regional franchise arrangements are attractive because they allow
for quick development of a business concept in a wide geographical area. Such agreements grant exclusive rights to the franchisee to develop a specific
number of units within a specified time frame.
Franchisees fulfill these contracts either by opening the outlets themselves or by sub-franchising them to other franchisees. The area developer is not
just a franchisee if sub-franchising is involved. S/He is also the franchisor’s support person in a local market. Under this arrangement, the area
developer and the franchisor share the responsibilities to the franchisees as well as the royalty revenues from the franchisees.
Who are these empire builders? They come from all walks of life but share a willingness to take risks and an ability to postpone gratification.
They also share three traits: dedication, energy, and vision. They primarily fall into two categories: the managers of managers and the investors.
The managers normally come from a senior position within a medium-to-large corporation. They have been involved in the day-to-day management of a number
of people. Ideally they possess the most important skill of managers: motivating talent. They have a strong preference to be closely involved with
the operations of the business. Conversely, the investors do not want to be involved in the day-to-day details of the business. They tend to come from
marketing and sales backgrounds and feel that they have something to offer the franchise company either on a state or regional basis. They clearly
fit a sub-franchising or regional development program because their skills and experience will enable them to effectively market the concept in a local
market and recruit qualified franchisees. Investors do not always care which industry they are involved in, only that the industry provides great growth
Our FranNet of Atlanta team of consultants can help you realize your dreams, goals, and financial requirements in selecting the franchise that meets your needs and show you how you can position yourself to multiply your success.
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