By Eric Parker
Most companies have been severely affected by the Covid pandemic. It has changed their business plans for expansion in most of the following ways:
- Profit has been reduced leaving less capital available for expansion.
- Their appetite for risk has been reduced and the performance over the next 3 years is unclear.
- They are being put under pressure from Trade Unions not to retrench staff.
- They have reduced staff and could find it difficult to manage company owned outlets situated a distance from Head Office.
- They will be under pressure to show favourable returns for shareholders.
- They may have branches that are either breaking even or losing money.
A possible solution is to consider Franchising which would have never been considered in the past.
This is how franchising can assist companies:
- They can franchise existing branches and in doing so offer the staff an entrepreneurial opportunity.
- They can grow the business using a third party’s capital and risk and still receive a monthly royalty and marketing contribution.
- A franchised outlet is much easier to manage, where the Franchisor does not have to worry about the shrinkage, staff controls, telephone and vehicles etc.
- A Franchisee will outperform an employee in turnover, profitability and customer service. We can show that a Franchisee will improve sales and profits by 30% within 3 months and this, with reduced overhead costs, will turn an unprofitable branch, into a profitable one.
- A franchisee is fully committed to the operations due to having ‘skin in the game’.
- In addition to the growth ensuring an increased footprint, it will also give the will give the group benefits such as improved procurement, increased marketing potential.
Franchising Plus has had some valuable experience introducing franchising into corporate companies. It must be stressed that franchising does not need to be exclusive and can be a combination of company owned, joint ventures and franchising. We would welcome the opportunity to discuss the advantages and disadvantages with you.