To Franchise or Not to Franchise, That Is the Question

You are the owner of a successful and growing independent business. Your profits are soaring, your employees are happy, your productivity is high, and it is time to expand. You can grow your business in two ways: opening new corporate-owned locations or franchising your business.

How do you decide? Learn the difference between franchise and corporate growth and examine the pros and cons of each. When you’re informed you can make the right decision for your brand.

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Franchising Your Business

All business decisions come with their benefits and disadvantages. Franchising is a good fit for many companies that are looking to grow in a cost-effective and relatively fast way. Check out some of the pros and cons of franchising your business:

Pro: Motivated Owner-Operators

Instead of recruiting, hiring, and training managers who might find a better job and quit, franchise locations are run by owner-operators who have as much at stake in the business as you. Your franchisees have the drive to put in the time and effort to make their businesses succeed.

Con: Less Control of the Day to Day

As a franchisor, you will outline policies, procedures, operations, and guidelines for your franchisees to follow but you are no longer in control of what happens at every location and with every owner.

Pro: Focus on Big Picture

Even though losing total control and becoming more hands-off may be an adjustment, it frees you up to focus on other things. Namely, growing your business. When you are no longer getting caught up in the daily work of putting out fires, dealing with employees, and handling customer needs you can spend time working on your business and growing your franchise system.

Con: Spend Time Preparing

If you want to franchise your business, you can’t simply snap your fingers and be ready to sign franchisees. Franchisors are responsible for creating training materials and resources to help franchisees succeed, as well as complying with the laws and regulations on franchising (that’s why enlisting the help of the pros is a smart idea).

Pro: Faster Growth

Franchising your business is a much faster way to grow, even when you account for the time spent preparing and training owners. You can grow much more steadily as franchisees continue to invest and front much of the cost of the expansion.

Corporate Growth

Just like franchise growth, corporate growth has its own set of pros and cons. Take a look at the good and the bad of growing your business all on your own:

Pro: Total Control

When you grow with corporate locations, you retain total control over your company. You have a team of employees, managers, and executives who all work for you so you get to call all the shots. With a trusted and qualified team of employees around you, this kind of control can still allow you to work on your business instead of in it.

Con: More Expensive

The biggest barrier to corporate growth is the staggering cost. Fronting the money to open new locations – including outfitting the building, recruiting and training employees, and marketing to customers – can be overwhelming for many business owners who are looking to expand. The costs only go up if you want to grow in a territory that is far away from your first location. In addition, not only do you have to maintain two or more corporate-owned locations, but the infrastructure required to keep everything running smoothly.

Pro: More Profit

What is it that makes corporate growth worth it for some businesses? The profits. If you can afford the huge costs of corporate expansion, you will be able to enjoy all the profits that come from your labors.

Con: Slower Expansion

Because of the huge cost and logistical roadblocks involved with adding corporate locations, your expansion will probably be slower than if you choose franchising. You are responsible for everything – financing, staffing, marketing, finding locations – so it is natural that it takes a while to grow this way.

Think franchising may be right for you? Try our free franchise feasibility study to find out!