Expanding your business doesn’t necessarily mean more oversight and more responsibility for you. There’s a way of making more money than ever out of your business ideas while at the same time doing less work than ever before. We know that idea won’t appeal to everybody because we’ve got some real workaholics among our readers, but if putting your feet up and watching the money roll in sounds good to you, carry on reading.
If you’re in the position to even think about turning your business idea into a franchise, you’ve done a lot of hard work, and you’ve already achieved some success. Now the time has come to take things to the next level.
You probably think that means putting in more hours, hiring more staff, recruiting a few people to work below you and help you manage the expanding business, and generally kissing goodbye to the idea of getting more sleep or rest time. It doesn’t have to be that way. Why not sell the framework of your business off one franchise at a time, and let someone else do the running while you take a cut?
That idea may sound alien to you if you’ve never thought of it before, but it’s one we see in action all the time, and even more so online. As an example, think of the online slots industry – a form of web-based gambling that makes billions of dollars in revenue each year. The companies who make online slots make a small chunk of that money, but the real money comes from operating an online slots website and hosting hundreds of the online slots in the same place.
The people who do that are often franchisees. They don’t own or make the mobile slots – they just select and stock them on their own websites, and often operate as a franchise owner in a network. The same is true of financial advisers, and realtors, and many other industries.
It’s not just white-collar companies that turn things over to franchisees. Even McDonalds do it, and there are people who’ve become millionaires by buying up McDonald’s franchises without ever flipping a single burger. With so many people and so many big-name companies using the franchise method, there must be some heavy positives to doing so – and there are!
Highly Committed Business Partners
Imagine you’re hiring someone for a senior, business-critical position within your company. How well they perform or don’t perform will have a major impact on your profitability for the next twelve months.
Getting that recruitment decision right is difficult, and always comes with risks. However skilled the successful applicant is, and however much they care about your company, they will never care about the company as much as you do and nor will they be exposed to the same level of risk. With franchising, it’s very different.
Instead of you employing someone, they’ve bought a franchise from you. That means they’ve invested their own money, and that money is at risk if their performance isn’t up to scratch. They will only make money if they perform well, and so they’ll have a much greater motivation to work hard than any salaried employee ever could have.
Quick Cash for You
As we said earlier, you’ve already done the hard work in building a business model that works. You know what it takes to get set up and how to make it a success, and all you need to do now is explain that to other people. In return, they’ll give you a cash lump sum, and an ongoing percentage of all the sales they make in the future.
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Once you’ve put together a training package, the lump sums are, from your point of view, almost money for nothing. People are buying the right to give you more money in the future – and the faster you grow, the more money you make!
Core Business Protection
This is one of the biggest of all the advances to franchising. With a franchise model, your core business isn’t at risk if one or two of your franchisees begin to underperform and lose money. The money that started their franchise came from them. If they get into trouble, you get to choose whether to financially support them or allow the franchise to fail.
You can pick and choose whether something’s a good long term bet, or if there’s no prospect of the franchise recovering. Crucially, other than any unsold stock you’ve provided to the franchise, the amount of risk their potential failure poses to you is minimal.
If you’d expanded and directly operated eight or nine new locations for your business and half of them failed, you’d have severe financial difficulties. If these new locations are franchises, your central business should barely be affected at all.
For the purposes of this scenario, let’s say your business is based in New York. You know New York very well. You’re thinking of opening the second premises in Chicago. Chicago is great, but how much do you really know about it? How much do you know about buying habits in Chicago, or what goes where in terms of Chicago’s street and store layout?
You can gather some information from the research and fact-finding visits, but you’ll never gather as much information as a Chicago resident already has in their head. Local knowledge matters when it comes to doing business, and it’s a type of knowledge that can be bought only with the investment of time as opposed to money.
If someone in Chicago wants to pay you money to sell your product to customers in their home city, they’re probably the best person to make those sales. Let them do the job.
How much does marketing cost you every month or every year? Probably more than you’d like it to. Here’s a different marketing proposal – you pay nothing to advertise, and instead, someone pays you for the right to advertise your brand and your logo everywhere they can think of. Sound good?
If so, open your self up to franchising. Every franchisee will want to get the word out that they’re open for business and looking for customers, but when they advertise themselves, they’re also advertising you – and you’re not paying anything or doing anything to make that happen.
More people are becoming familiar with your brand in every location there’s a franchise of your brand, and that process is making you money rather than draining your resources!
As you can see, there are multiple positive points when it comes to the idea of franchising – so now all you need to know is work out a means by which your business or product could be franchised. Speak to a business consultant today – it could be the best move you ever make!