THE IMPORTANCE OF FRANCISEE MODELS IN BUSINESS EXPANSION

CAPITAL 

The franchisor’s capital requirements will be lower because the franchisees provide the capital to open each franchised outlet. 

MOTIVATED AND EFFECTIVE MANAGEMENT 

The local management of each franchised unit will be highly motivated and very effective. They treat the franchise units as their own and that will usually lead to higher sales and profit levels. 

FEWER EMPLOYEES 

The number of employees which a franchisor needs to operate a franchise network is much smaller than they would need to run a network of company owned units. 

SPEED OF GROWTH 

The franchise network can grow as fast as the franchisor can develop its infrastructure to recruit, train and support its franchisees. 

REDUCED INVOLVEMENT IN DAY-TO-DAY OPERATIONS 

The franchisor will not be involved in the day-to-day operations of each franchised outlet. 

LIMITED RISKS AND LIABILITY 

The franchisor will not risk its capital and will not have to sign lease agreements, employment agreements, etc. 

INCREASING BRAND EQUITY 

Leveraging off the assets of franchisees helps franchisors grow their market share and brand equity more quickly and effectively. 

ADVERTISING AND PROMOTION 

Franchisor will reach the target customer more effectively through co-operative advertising and promotion initiatives. 

CUSTOMER LOYALTY 

Franchisors use the power of franchising as a system to build customer loyalty- to attract more customers and to keep them. 

INTERNATIONAL EXPANSION 

International expansion is easier and faster, since the franchisee possesses the local market knowledge.