The primary reason most entrepreneurs turn to franchising is that it allows them to expand without the risk of debt or the cost of equity. First, since the franchisee provides all the capital required to open and operate a unit, it allows companies to grow using the resources of others.
When should you not franchise?
8 reasons not to franchise your business
- Too many moving parts. …
- The unit business is very expensive to develop. …
- The business is not built on a strong trademark. …
- No financial depth and little experience. …
- No franchise manners. …
- It’s a buggy whip business. …
- No value of group purchasing. …
- Not ready for the bright lights.
Why is franchising good for growth?
1) Money – franchising allows you to use other people’s money to grow your business whilst also having less involvement with the day-to-day operations. 2) Time – franchising provides a method for growing your business quickly, whether you plan to grow locally, nationally or internationally.