<\/span><\/h2>\n\n\n\nThe franchising business has seen a huge growth in the year 2021 and is even expected to break previous records in the fiscal year 2022. Most of the credit for this growth goes to the sharp contraction in 2020. The renormalization after this contraction served as the basis of an economic rebound of around 788 billion dollars in 2021.<\/p>\n\n\n\n
We expect the franchising business to continue trending upwards in 2022 while breaking all the previous records. Just in 2021, the number of franchise employees increased by 8.2%, attracting employees with great benefits, job security, and career advancement. In the coming year, the franchise business is likely to grow about 5%, making it a whopping $826 billion, even surpassing the 2019 levels.<\/p>\n\n\n\n
Although as the economy stabilizes, the growth will eventually slow down and stabilize. However, even at that rate, the franchisors would be able to add a couple of hundred thousand jobs in the market every year in the US alone. It is also anticipated that the number of franchised establishments will increase by 2%, surpassing the rate in the pre-covid era.<\/p>\n\n\n\n
The geographical location has a lot of effect on franchises’ rate of growth. If rightly implemented, the economic outlook for the franchising business model is going nowhere but upwards in the coming years with a high success rate. However, the locations, market demands, and migration trends will determine if the success rate is impressive or satisfactory.<\/p>\n\n\n\n
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<\/span>Optimal Way To Scale Your Business<\/strong><\/span><\/h2>\n\n\n\nWe have talked about various advantages of the franchising business model for a franchisee, but what motivates a brand to sell its franchises to other individual businesses? The phenomenon is pretty simple and can be put into a single word, “scalability. “<\/p>\n\n\n\n
Franchising allows the brand owner to scale and expand their business exponentially. Reaching a new customer base and attaining brand loyalty through the trademark helps them create an extensive demand for their product.<\/p>\n\n\n\n
However, then comes the question of starting a new branch on their own. Starting and operating a newly established branch involves a hefty investment along with time consumption.<\/p>\n\n\n\n
Through the franchising business model, the brand can expand without any limitations. They earn through the license fee and ongoing royalties, during which both the franchisor and franchisee benefit from this business model.<\/p>\n\n\n\n
In order to get a finer look at how successfully a business can franchise its trademark, take a glimpse at some of the most common franchises in the world.<\/p>\n\n\n\n
\nMcDonald’s<\/li>\n\n\n\n KFC<\/li>\n\n\n\n 7-Eleven<\/li>\n\n\n\n Hertz<\/li>\n\n\n\n Ford<\/li>\n\n\n\n Hyundai<\/li>\n\n\n\n Hilton Hotels & Resorts<\/li>\n<\/ul>\n\n\n\n<\/div>\n\n\n\n
<\/span>Disadvantages Of The Franchise Business Model<\/strong><\/span><\/h2>\n\n\n\nIt’s an optimal way of buying yourself into a business and representing a successful trademark. However, there are certain cons associated with this business model too.<\/p>\n\n\n\n
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1. Franchise Regulations<\/h3>\n\n\n\n The franchise agreement usually contains restrictions on how you can run the business. You might be able to negotiate some aspects in your favor, but still, you would have to comply with company regulations and restrictions.<\/p>\n\n\n\n
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2. High Franchise Fee<\/h3>\n\n\n\n The leading franchises of the world have a waiting list of years. However, if you somehow manage to get accepted, the costs might be higher than you expect. The license fees are usually pretty expensive. In addition, you also have to pay continuing management service fees, and you may have to buy products from the franchisor.<\/p>\n\n\n\n
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3. Difficulty In Reselling<\/h3>\n\n\n\n It might be difficult for you to sell your franchise to another individual business owner. Usually, franchise agreements don’t allow such changes in ownership. However, if they do allow it, the potential buyer has to be approved by the franchisor before he is handed the reigns of the franchise.<\/p>\n\n\n\n
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4. Inflexible Nature<\/h3>\n\n\n\n The inflexible nature of a franchisor may cause restrictions on your creative freedom. After all, you are running someone else’s business, so they need to be in accordance with every key aspect of the franchise. These aspects may diminish the potential to make changes according to the market response.<\/p>\n\n\n\n
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<\/span>How To Choose The Right Franchise For Yourself?<\/strong><\/span><\/h2>\n\n\n\nFranchises are available in almost every industry. However, if you are looking towards buying a franchise, their several factors that must be addressed in order for you to strategize your buying decision and individual business plan completely.<\/p>\n\n\n\n
Here are some things that you are required to clear before pursuing the franchise business market:<\/p>\n\n\n\n
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1. Personal Motive<\/h3>\n\n\n\n Everybody has a different passion for the industry. Determining your personal motives help you understand what kind of business you want to get into. If you want to make money while staying at home, you can’t be a manager of a trademark. So, these are some things that need your attention before taking an entrepreneurial step in your career.<\/p>\n\n\n\n
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2. Industry Sector<\/h3>\n\n\n\n The word franchise is not only related to the food and beverage industry. Most of the leading car companies like Hyundai and Ford also work on franchise business models, and they earn significant profits from it. If you are someone with a passion for the automotive industry, you wouldn’t want to run a fast-food franchise, would you? That’s why you need to ask yourself a question “what type of industry would I like to conduct business in?”<\/p>\n\n\n\n
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3. Investment Budget<\/h3>\n\n\n\n Without investment, you can’t get a franchise license from the franchisor. So, the investment budget plays a great role in categorizing the franchises of your choice. Franchise costs vary by industry. It can range from as low as $10,000 to upwards of $1 million. You need to compare the initial investment with the rate of return before buying a franchise; this will help your buying decision.<\/p>\n\n\n\n
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4. Mutual Expectations<\/h3>\n\n\n\n The franchise agreement should be mutually agreed upon with both parties content with it. Any ambiguities in the contract can lead to a conflict of interest and can damage the franchisor\/franchisee relationship. So you should be clear about what your potential franchisor expects of you so that you can sustain a long-lasting relationship.<\/p>\n\n\n\n
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<\/span>Conclusion<\/strong><\/span><\/h2>\n\n\n\nThe trend of the Franchising business model guarantees that this industry has normalized after the pandemic and is going nowhere but up and away. Through this business model, both the franchisor and franchisee benefit in various ways and both parties boost the scalability of the business trademark.<\/p>\n\n\n\n
The considerable increase in the brand’s customer base allows the brand’s product to reach customers in other parts of the world with the same properties, qualities, and attributes. Thus, making it a perfect way to start or expand your business based on the franchising business model. Almost all famous brands have gone international by selling franchises and have scaled their business all over the world.<\/p>\n\n\n\n
<\/div>\n","protected":false},"excerpt":{"rendered":"
A company’s business model refers to the plan through which the company intends to profit. Every business or company is brought up from the ground … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":2580,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[],"yoast_head":"\nFranchising Business Model Analyzed And Explained - thekeyfact<\/title>\n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n \n \n \n\t \n\t \n\t \n