Business owners looking to expand their small businesses often turn to franchising as a potential opportunity for growth. However, many ask if franchising is organic growth, so today, we will answer this question fully and explain the different approaches you can take to growing your business, including how franchising works and how you can make your business a franchise.
Is franchising a form of organic growth?
Franchising is a commonly used method by small business owners of organic business growth and can be a much easier option than purchasing new locations and running them all by the same teams, as this can require large amounts of capital and staffing. This is why many business owners turn to franchising since franchises do stand out from other business models since you will have franchisees managing each location, allowing you to expand your business at scale. Also, when you decide to franchise your business, you save a significant amount of capital on other fees such as construction, renovation & marketing, as the franchisee in the initial franchise fee usually covers these fees.
The advantages and disadvantages of organic growth through franchising
Lower risk – When you franchise your business, all standard costs will be covered by the franchisor allowing you to make pure profits instead of investing your own capital into a new location that may not succeed.
The business can maintain its quality standards – When a franchise recruits a new franchisee, they will have to agree to maintain the businesses quality standards when operating in the agreement meaning you will not have to worry about franchisees not maintaining the expected standards set by you, the franchisor.
Faster growth – Franchising can help you grow your business at scale with dedicated franchisees operating in each location, allowing you to focus on what matters to keep your growth stable and consistently expanding.
The disadvantages of organic growth through franchising
Your business might not be franchisable – This heavily depends on what type of business you run. If a franchise requires specialist skills or is difficult for new franchisees to replicate, there is a high chance the franchise will fail. This is why you must ensure your business is franchisable before expanding through franchising.
The barrier to entry may be too high – If you have a business that requires previous experience in your industry, you may struggle trying to recruit new franchisees with the skills necessary to make the franchise business a success.
Expenses – Although you save more capital through franchising your business in the long run, you still need to pay for a few services from lawyers, accountants, and maybe even business consultants to help make your business a franchisable concept to be able to get the ball rolling.
Want to learn more about growing your business through franchising?
Now that you know that franchising your business is a method of organic growth and the advantages and disadvantages of growing your business through franchising, you may be interested in learning more about how you can grow your business through franchising. If so, we recommend you check out our latest articles at Franchise UK for the latest franchising news & advice.
I hope you have found this of interest & use. However, if you require more assistance to get the interest of potential franchisees, we recommend filling out the form below with some basic contact information, and we will put you in touch with experienced franchise consultants recommended by Franchise UK.