This blog post is the first in a series of articles which will build to look at all aspects of franchising, including determining if a business is commercially and legally ‘franchise-ready’.
The strategies and processes to grow a business; IP protection for the franchisor; legal and compliance issues; getting the right franchisees and building a successful franchise network; branding and marketing strategy; online platform; social media; decisions around buying a franchise; strategies to grow an international network; bringing a great franchise concept from overseas; right through to knowing when to sell.
Why is this important?
Franchising is the growth strategy of choice even when economies are going through tough times. Why is this? In simple terms because it addresses the two fundamental requirements for business growth:
- Raising the funds to expand
- And finding the right people to manage that growth?
A franchise is a successful business concept developed by the franchisor who grows a multi-unit network through selling the rights to their intellectual property and the systems and processes to operate one or more individual units to franchisees.
The franchisees in turn operate their businesses under their guidance of the franchisor that gets an ongoing royalty or fee.
Franchises dot our landscape and meet thousands of our goods and service needs every day. From frozen yoghurt, blow waves and guinea pigs to nose rings, IVF or a mortgage, 453,000 people working in almost 83,000 franchised outlets across Australia contribute about $154 billion per year to the economy, according to IBIS world.
Franchising is a huge part of the global economy. Pepsi, Shell, BP, Ford, General Motors and KFC have used franchising as a capital raising, HR, management and marketing tool to span the planet.
That said, over 90% of the almost 1200 franchises in Australia are home grown. Hairhouse Warehouse, Pie Face, OPSM, Total Tools, Boost Juice, Grill’d, Baker’s Delight, Terry White Chemists, Laser Clinics, Pack and Send and ANZ Mortgage Choice have all used franchising to grow substantial domestic and in some cases international franchise networks.
In fact Australia is one of the most heavily franchised countries per capita in the world. And maybe that’s because we are also one of the most risk averse nations globally, which combined with the fact that Aussies really like to be their own boss, makes franchising such a winner.
The franchisor’s proven profitable concept supported by their training, systems, marketing, brand and often product takes a lot of the risk out of running your own business.
So why is franchising the growth strategy of choice even when economies are going through tough times?