Absolute

No doubt about it, franchise is one of the most powerful method for expanding your business. Not like traditional business expansion methods, this method has its own strength point. Franchising your business, you could have your strong and powerful brand. You don’t even have to spend more money to build your brand. But one thing you should know, the important point about franchising is market domination. Once you’ve gain control of the market than you have : powerful brand, high profit, and of course domination of market share.

Here’s one example, assume you have a product, let’s take burger as your product. In the current market you’ll jumped in already has 3 different burger stores as your competitor. Then, with you as their new competitor, this market share will be divided to four portion. Assume each burger has equal market share, the you, the new one will have 25% of burgers market share.

With franchising method, you don’t have to spend more money to open your new stores. Ok, now you have 2 burger stores, it’s not your stores though, your franchisee own them. If you look at the profit gained by burger sales, maybe it’s not as high as if you own those 2 new stores. But when you look at market share pie, now your burger has half slice of market share, did you notice it? Because now there are 3 stores that sells your burger, plus 3 existing competitor, market’s divided to 6 portion. And your burger own 3 of them, well you’re the market leader now. You don’t have to spend more money to expand your brand, and you still get profits from franchise fee, royalty fee, training fee, etc. Franchise is a matter gaining profit through your franchisee not from your franchisee. See the difference? I’ll explain it on my next post.