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Why Franchisors like Franchising

Companies favour franchising as it's an excellent way of growing their brand. Here are some reason companies find franchising such a reliable method for expansion…

• It is a proven business strategy for business growth. Franchising is a very successful business model that has been duplicated worldwide for over half a century.
• It carries low risk for international expansion. The risks are low for the franchisor, as it is a master franchisee that takes the franchise concept into a new country.
• It can be a faster method for expansion with less logistical problems. Franchised companies can achieve faster growth, as it's the franchisees that manages and operates their own business. The franchisor is responsible for the network and procedures behind the business that allow the franchisee to trade. Therefore franchisors can concentrate in recruitment matters if existing franchisees are operating smoothly. Logistic problems are low for franchisors as franchisees will be managing their own supply channels.
• Franchisees invest their own money. As franchisees are often investing their life saving they are highly motivated and focused to making their business as successful as possible.
• Franchisees have local and valuable knowledge of the area. There are advantages for the franchisor in recruiting local based franchisees, for example, the franchisees may be popular in their community and have a good understanding of local matters.
• There is limited payroll, rent and administrative costs. With many franchise systems the responsibility of rent, other administrative costs, and payroll falls to the franchisees. The franchisor locates the premises and location, but the lease and rent is the responsibility of the franchisee.