From a Franchisor's perspective, there can be a number of advantages in establishing a franchise system, such as:
Economies of Scale
Franchisors can often achieve economies of scale and improve their buying power by aggregating the purchasing of all Franchisees within the franchise network.
Franchisees contribute initial start-up (and ongoing) working capital themselves in respect of each outlet - thereby minimising the capital the Franchisor would otherwise have had to outlay if the Franchisor were to open a corporate store.
Franchising allows for increasing brand exposure through multiple Franchisee outlets.
Allocation of Time
Day-to-day operations of each Franchise outlet are managed by the respective Franchise Business owner - this frees up the Franchisor to concentrate on broader issues related to growth of the franchise system.
Franchisees that join the franchise network invest their time, effort and money - Franchisors can feel confident that the Franchisees thereby will be inclined to meet quality standards and be committed.
A number of franchise systems use royalties levied off the sales volume of Franchisees to generate revenue. Successful Franchisees can result in higher revenues for the Franchisor.
If you are considering growing your business through a franchising model, contact Greyson Legal | Franchise Lawyers for details on how we can help you. email@example.com