Privately Owned Local Companies Profit By Franchising

By on February 21, 2018

Local companies that are highly structured and consistently profitable should consider franchising. Franchising a business is an ideal way to leverage a popular brand into national and even international markets dramatically increasing the value of the brand.

Countless successful local companies have never considered franchising – yet, it may-be the perfect option to expand outside its borders. The   franchise  model offers greater diversification as well as accelerated growth potential, compared to corporate structures that typically produce slower regional growth.

These advantages are particularly evident when a company expands with a  franchise  structure when sales are peaking and brand loyalty is at an all-time high. Companies at the height of success should look outwards to see where else they can leverage their brand. Think of it like the starting quarterback – you’re the star, you’re hot, and this is the time when everyone wants a piece of you.

Launching a national  franchise  program while maintaining ownership of the profitable base is an ideal growth strategy for such local success stories. Properly structured  franchise  models allow business owners to grow the company as well as diversify revenues- by expanding into new markets that the companies were not considering. It also allows the company to keep up its current profit centre as a base of operations

But the key is timing, highly successful local companies have a key advantage: they are able to dictate the terms of a  franchise  arrangement. In other words, they don’t have to negotiate for revenues because their financial picture is already healthy. This, in turn, ensures greater potential for healthy revenues for the entire  franchise  operation down the road. The more you are able to enforce standards and maintain consistency, the more replicated that success will be.

Franchising successful corporate structures carefully can increase the value of their brand provided the company maintains strict control over standards and quality.

Many entrepreneurs, when considering the franchising option, have the same fear. They don’t want to work with people who don’t care about their business the way they do, and who might wreck their brand. Highly successful companies can dictate the terms of how they  franchise  without negotiating on standards. These companies are at a stage where they’re established – they’re not out chasing revenue. It’s what makes  franchises  such as Tim Horton’s, Giant Tiger, McDonald’s and Canadian Tire such a huge success.

Franchising is a particularly good option for local firms that have posted consistent sales growth over an extended period, are among the top performers in their class of competitors, are respected local brands and have highly structured operations.

This strategy can also be the key to unlocking massive potential value of the brand. Part of any business growth strategy is valuation of the brand, and this analysis will vary greatly depending on how you plan to grow the company. Local brands are sometimes extremely successful but the value, in financial terms is low due to the constraints of a local market. Taking that brand national or even international can unlock huge potential in the value of the brand – as long as the core values of that brand are not compromised along the way.

Source by Ethan Posen

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