What it Means to Franchise a Business

Legally speaking, what it means to franchise is pretty straightforward. a business provides an outside entity the rights and licenses to work as a representative of that business, through an equity position and governed by established rules.  But on the other side of the concept, the entrepreneurial part of franchising, is often what people embrace as they determine to move their businesses toward expansion.  


Franchising is a growth strategy that utilizes invested ownership partners rather than hired management.  This “ownership model” has numerous advantages, one of which is the level of commitment required to join the company. Running regional corporate offices with “hired help” requires a large infrastructure and deep corporate pockets, as the turnover typical in today’s job market makes staffing and training a full-time job for one or multiple people from the main office.

  But when you’re investing that time and training into a franchisee, the figurative and literal buy-in required to participate creates an entirely different level of commitment, as an ownership stake always trumps the “my new job” mentality.  Franchising means creating stakeholders in your expansion.  Buy getting ownership-level commitment to your concept and brand, the move into new territories has a much higher chance of success due to a lower level of turnover, allowing the time spent training and coaching to be cumulative rather than repetitious as the players on the board are less likely to change.

By Todd Rudge


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