Why the concept of retail franchising is popular

Sunday, February 1, 2015

Why the concept of retail franchising is popular

Retail franchising is growing, and there are, in fact, two significant reasons pertaining to it. The whole idea of the franchise was born because the companies felt that they will be better placed to expand to different geographical locations. They could easily break language barriers.  The one best example how retail franchising has been implemented is McDonalds.

McDonalds have their franchises in many parts of the world. They even have franchises in China, where people generally don’t speak English. Imagine if McDonalds decides one day suddenly to cancel the franchises licence and establish itself under its own direct supervision in places like China, or Chile, where people don’t speak English.

It will be difficult to run a store. They may not fail, but they will not be able to expand as fast, as they have been doing now. Franchises have enabled companies to overcome competition in a strategic way.

The second reason, why retail franchising grew, is because the middle-class people decided to cash on it. The higher middle class in particular saw it as an excellent opportunity to do business. It also boosted their self-esteem when they began to foresee their collaboration with famous brands like McDonalds, Pizza Hut and KFC. 

Primary benefits of retail franchising

Expansion is definitely the primary thought behind retail franchising. However, companies have now started to explore how to expand its business in the speciality sector. What retail franchising has been able to do in the emerging markets is unique. It has allowed the companies doing business with the company owned formats, to try and experiment franchise concept, particularly in the speciality format. 

The growth of retail franchising is such that the franchise model of business is now familiar in many speciality sectors such as apparel, IT, lifestyle and even in footwear and convenience. There are franchise opportunities in abundance. The companies are searching for those who have the eagerness to partner with the best. There is a franchise for sale existing in all the speciality formats. 

Those who are interested to step into the franchise business model should understand the benefits structure that retail franchising offers business houses. The best growth of the franchise model of business is seen where there is a transition in the lifestyle. The growing middle class also makes the franchise business model prosper. 

Franchising is a win- win business model

It has something for everyone. Why do you think companies like Pizza Hut or McDonalds have expanded so rapidly? It is because they have been able to attract investors who are willing to partner with its brand. These companies have been able to sell their brand image to those from different countries and geographical locations, and have got entrepreneurs invest in their brand.

On the other hand, entrepreneurs have everything to gain for. In many cases, they are guaranteed some returns. They don’t carry any risk doing business. They are partnering a brand, yet, they own a business. And this is what makes franchising business such a great model to work with.

Author: Pat Hoddle

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