Business visionaries choose franchising to increase their piece of their market. Why are visionaries using franchising in order to easily expand into hundreds of outlets?
- Capital – The main obstruction to expansion is absence of access to capital, but franchising is an option in order to obtain capital. Entrepreneurs choose franchising because they can expand without the need of securing collaterized loans. By utilizing other individuals’ cash, the franchisor can expand with lessobligations.
- System – After the brand’s prototype has been established, visionaries use its solid reputation to extend into other regions. Once the brand’s system has been widely accepted, other franchisees can easily be recruited into the network.
- Franchise Support and Development – To easily expand, franchisors use sponsorship, and they also offer franchising. Some offer a reduced price of royalties, while others even waive their franchise fees to rapidly saturate the market. If there are more franchisees, then the brand becomes stronger because the franchisees can take advantage of a supportnetwork like, for example, a collective local advertisement.Conversely, a smaller group of franchisees offers lesser strength because the support system is merely skeletal at best. They lack support because of the meager infrastructure. Also, consolidation of support is not possible due to their meager numbers.
Franchising enablesentrepreneurs to exponentially develop their businesses; that’s why the Philippines (more than 1,600 brands) is now the franchising center point of Asia.