Expansion is among those goals that businesses want to have over time after demonstrating success in the core branches. However, opening in another location may have a lot of barriers and difficulties.
First is the lack of capital. With today's crisis still there, throwing away new capital in favor of expansion may not be in anyone's interest. Franchising allows the owner the chance to expand his/her business without incurring debt or reducing capital.
Second is the lack of people. It is very difficult to find a good unit manager to handle your branches. It takes months to train one, which means more time and capital used. Sicne franchises entail both investment in the unit and a stake in the profits, these unit managers should be able to do well.
Last is the lack of time. If a company does not have much time to make the expansion, franchising is the way to go, as the franchisees are the ones who will do these growth tasks. The franchiser will, of course, provide guidance, but the franchisees will do the rest of the tedious legwork.
But wait, how do you make your business worth franchising? Franchisees won't just knock on your door and ask for a franchise license. You will have to earn that, too. What does your company have to have in order to get these franchisees?
Your company should be credible. That's always on top of the list. If your company has a bad reputation among customers, I honestly don't think anyone will consider franchising, because these franchisers became customers first. Then your business has to be unique in a sense that it positions itself well among competitors. Your business has to sit well among a certain group of franchisers.
Then it has to be teachable, of course. You'll have to employ a system that will be easily understood by the franchisees. That's one of the reasons why a personal friend of mine chose to be a franchisee instead. She said that implementing a system (production, sales, etc.) from scratch is very difficult. You'll have to provide this system to them. Finally, the business must have an adequate return. You have to make your franchisees financially happy, naturally.
