Franchising has maintained a steady growth and significance in leading businesses in the 21^st century because of the fundamental qualities this system embodies.  Some key qualities of franchising are listed below:

• Franchising is a knowledge based business
• Franchising is a synergistic network of enterprises.  This simply means demographic proximity does not limit individuals to pursue common goals.

Franchising offers franchisors a cutting edge over other business models such as:

• The ability to grow using other people’s capital and time
• It allows freedom to focus on central business processes while the franchisees focus on day-to-day operations
• Franchising has a reduced exposure to risk due to the franchisee maintaining responsibility for opening a new business.
• Owner operators are evidenced to outperform managers
• High earning ratio on capital outlay

Disadvantages historically associated with franchising can include:

• Selecting unsuitable franchisees – which can have risk aversive consequences
• Franchisee inertia to change in areas such as:

Increasing turn over, investing more capital to update operations, and adapting operations to changing market requirements.

• Communication difficulties between franchisor and franchisee
• Effective monitoring of franchisees to protect the brand

Franchising impacted on the world wide business industry when American fast food chains reached international shores in the 1960’s -1970’s.  However, it was not until the value of branding was recognised and a new generation of franchise professionals emerged that franchising unleashed itself as a true market force in the early 1990’s.

This continues to be reflected in the banking sectors enthusiasm and encouragement in supporting franchises as good investments. This can be accredited to the fact that franchising works on the premise of buying into existing business systems evidenced over significant periods of time as lucrative and sustaining.

Franchising and the strength of brands

Franchising has the upper edge on other business models due to the branding associated with leading market figures such as Video Ezi, McDonalds, Robert Harris and so on.  Franchised expansion has been evidenced to be the most time and cost effective mechanism to build a brand.

What is franchising?

Franchising is one of the most efficient and effective mechanisms of operating and sustaining business.  It combines vision, focus and dedication of owner-operators and combines this with the business systems, brand strength and purchasing power of an established and proven market player.

Franchising fundamentals

You need firstly to have a successful business and secondly the resources, commitment and knowledge.

For more information watch the following video: