There are four core reasons why franchising is such an effective motor to revenue growth in a wide-ranging group like FOS:
The main benefit of franchising usually means that franchised networks can be expanded more quickly than company-run networks. Franchising is all about replicating a clear and successful business formula and, provided the franchisor is prepared to make a reasonable investment in marketing at national level, the brand can quickly be expanded nationwide. This will in turn generate increased sales volumes and stronger purchasing power, via which the organisation can command greater discounts from its suppliers.
Better Market Penetration
Franchisees are normally well established as part of the local community, either on a personal level or as a result of their past business activities. This can give them a very significant advantage in gaining new business for the franchise at a local level. They will generally live within the franchise territory, be known there and will be seen as having made a permanent commitment. These are all attributes which generally do not apply to company employees and will be of enormous value in helping franchisees to penetrate their local market.
Franchisees have invested in their business and know that they can benefit directly from its success. Since the business is their own, franchisees will take real pride in the service which they provide and will ceaselessly strive to exceed the expectations of their customers. This commitment will also reflect in their loyalty to the franchisor’s brand, because it is also the franchisee’s brand, and they are intent on building up a business which can be sold on for profit at some future date. Of course, not all potential franchisees are so strongly motivated – nor do all have the necessary ability to succeed – so the franchisor’s initial selection process must be rigorous.
To expand internationally, the franchise system has many advantages. This is a very effective method of expanding a business overseas without any need to create subsidiary companies or branches in chosen countries.