Advantages of the franchising system

There are countless benefits to becoming a franchisee, which is why franchising is one of the fastest-growing sectors of the Australian economy. Here is a short list of 18 advantages of franchising over stand-alone forms of small business:

· The franchisor provides detailed training

· The franchisee has the incentive of owning their own business with additional benefit of continuing assistance from the franchisor

· The franchisee benefits from operating under the name and reputation of the franchisor, which is already well established in the mind and eye of the public.

· The franchisee will usually need less capital than they would if they were setting up a business independently because the franchisor, which is already well established in the mind and eye of the public.

· The franchisee will usually need less capital than they would if they were setting up a business independently because the franchisor, through their pilot operations and buying power, will have eliminated unnecessary expense.

· The franchisor provides the advice and/or help in identifying suitable trading locations or operating territories for the franchisee.

· The franchisor helps the franchisee obtain occupation rights to the trading location, comply with planning (zoning) laws, prepare plans for layouts, shoplifting and refurbishment, and provide general assistance in calculating the correct level and mix of stock for the opening launch of the business.

· The franchisor trains the franchisee (and very often, the franchisee’s staff as well) in all areas of the business such as; manufacture, preparation, accounting, business controls, marketing, promotion and merchandising.

· The franchisor may negotiate better rates of finance, or more favourable conditions, for franchisees with financial institutions.

· The franchisee receives the benefit on a national scale (if appropriate) of the franchisors advertising and promotional activities at a lower cost than if they were to attempt such marketing themselves.

· The franchisee taps into the bulk purchasing power and negotiating capacity made available by the franchisor by reason of the size of the franchised network.

· The franchisee can call on the specialised and highly-skilled knowledge and experience of the franchisor’s head office organisation, while remaining self-employed in their business.

· The support and benefits provided by a franchise system greatly reduce a franchisee’s business risks.

· The franchisee has the services of the field operational staff of the franchisor who are there to assist with any problems which may arise from time to time in the course of the business.

· The franchisee has access to use of the franchisor’s patents, trade marks, copyrights, trade secrets, and any secret processes or formulae.

· The franchisee has the benefit of the franchisor’s continuous research and development programs, which are designed to improve the business and keep it up-to-date and competitive.

· The franchisor provides a knowledge base developed from their own experience, as well as that of all the franchisees in the system, which would otherwise be impossible for a non-franchised business to access.

· Defined territories of operation within the franchise can help protect the franchisee from competition.

· A franchisee can always speak to their franchisor or a fellow franchisee to discuss their business challenges or problems – something a non-franchised business can almost never do.

Read on about Franchise Council of Australia is a not for profit membership organisation that is the peak body representing the franchising sector in Australia.