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Why Should I Franchise a Business?

Creating your own business has grown in popularity since the job market has become less stable in recent times. If you’re a small business owner the thought of franchising has most likely come to mind. If you decide to go this route and create a franchise agreement, you would sell the rights to open a new unit to another party that agrees to follow your business model and pay you a percentage of sales. Let’s take a look at some benefits as to why franchising your business may be a good fit for you.

Why Should I Franchise a Business

Successful Rates

Franchising has a higher success rate than regular small businesses. The three-year failure rate of a new business is as high as 65 percent whereas a franchise is only 2 to 4 percent. This is because part of the deal is the franchisee must follow the business model that’s made you successful. If the franchisee follows your roadmap, this will significantly reduce or eliminate any usual first-year business mistakes and generate more royalties for you as a franchisor. These royalties can range anywhere from 5 to 15 percent of gross sales.

Rapid Growth

If your business has grown in popularity and you’re looking to expand quickly, franchising can be a great option. Franchising eliminates the process of obtaining financing which is required for regular expansion. In this case, the franchisee will provide the capital and take on any business risks that could occur.

Motivated Partners

The franchisee taking on the risk can be another beneficial factor to you. Since there can always be risks with any business venture, this will make the franchisee more motivated to succeed. Success creates more income which leads to more royalties for you. If you expanded regularly and hired a manager to run another location they may not be as motivated since they aren’t invested in the financial state of the business.

Fewer Expenses

Franchising your business can also lead to fewer expenses for you. This means the franchisee will be taking on expenses such as payroll, and marketing taxes, plus the cost of renting or leasing their own space and equipment. As a franchisor, you may want to help your franchisee find the necessary financing to get started but you won’t have to co-sign any loans.

If you’re ready to see the success of your business skyrocket even higher, is the right place to start. Our team will be the number one resource you need to create a successful franchise. Visit us at 640 Freedom Business Center Drive Suite 131 King of Prussia, PA 19406, or call today at 833-372-6249 to request a free consultation or fill out the form on this page!