The Franchisee Handbook

Money. Time. People. Economies of scale. Risk reduction. Locking in a channel of distribution.

Franchising also allows franchisors to eliminate their responsibility for the daily operations of their business, thus allowing them to grow using a leaner management structure. Franchisors do not need big Personnel Departments to screen, hire, fire, and motivate employees. Franchisors do not need the staff of bookkeepers and payroll staff necessary to pay hundreds of employees. Franchisors simply delegate this responsibility to their franchisees.

In order for a company to open a single unit, it must look at dozens of sites, determine the best choice, negotiate the lease, arrange for an architect to design the interior, hire a contractor for the build-out, negotiate equipment leases, purchase initial inventory, hire and train managers and staff, and prepare for the grand opening. With a franchise program, a company can depend on its franchisees for most of this—it merely provides the training in how to execute each of these steps.