The benefits of franchising include all of the following except:
Economies of scale
Franchisors can expand without incurring additional financial burdens. This includes avoiding capital, supply chain and geographical constraints.
The cost of buying products and services through a franchise system can also be reduced through volume discounts or rebates from either the franchisor or trusted suppliers. Purchasing efficiencies can increase operating margins and provide a competitive advantage.
A strong brand name helps attract customers who already have a pre-existing relationship with the company. This helps to reduce marketing expenses and build a customer base, which can help the business grow.
In-house training and support
Franchisors often provide extensive in-house training programs, which are tailored to the needs of their franchisees. This enables the franchisor to ensure that their franchisees have the skills and knowledge necessary to operate the business successfully.
In addition, they can offer a wide range of technical support from experienced staff. This can help to avoid costly mistakes that might otherwise occur if the franchisee were to independently operate the business.
Highly motivated owners
Another key benefit of franchising is that a highly motivated owner is overseeing each outlet. Since their life savings are on the line, the owner is much more likely to ensure that each outlet is running efficiently and profitably.
They are more likely to invest in the future of the company through improvements to the operating system and other business development initiatives.