subject: The Key Benefits Of Franchising [print this page] Lets say you own a gymLets say you own a gym. Not just any gym, but the best gym in town - that is what your clients and trainers tell you. You aptly named the gym 'Fit', and the moniker does not just describe your clients, it depicts your business. The place is immaculate, well located, and features the best equipment. No wonder the place is humming from 6AM to 10PM.
The gym practically runs itself. Your trainers are the finest in the area and they know how to treat customers. Your services are priced fairly. Your programs are scheduled to attract early-morning commuters, moms, kids, athletes, and the corporate crowd. And your marketing plan works like clockwork, enticing folks to keep their New Years resolution in January, shape up for spring in March, and take advantage of cool summer specials in June.
One day, you have a vision. You imagine your gym not just in your town, but in the next town over. And the town beyond that. And in the next county. OK, throughout the entire region. Suddenly, you envision going national, even international.
For a moment, it all seems possible. You could simply duplicate your fool-proof operation so that there are hundreds of well-located, immaculate Fit gyms not around the country, but across the globe. Then reality sets in. Where would you get the capital? A bank? Maybe a banker would loan you the money to open a second location. But to expand rapidly? Not so likely. Venture capital? That could mean giving away the farm, which is what most early venture firms would expect in return. Plus, you would the need to contend with the hassle of someone looking over your shoulder, telling you how to run Fit. Most entrepreneurs would not find that scenario all that appealing. We know we would not.
Then it hits you: Franchising. By franchising, people will actually pay you for your tried-and-true business model so that they, too, can run a profitable enterprise. Even better they will pay you royalties based on their sales. But does franchising really work? It has for more than 50 years and, for the most part, successfully.
With franchising, people pay you for your proven business model. Even better, they pay royalties. But you will need a good concept, good management, and the right amount of capital to be successful. A franchise can be defined simply as an entity that has three factors: 1) the grant of trademark rights, 2) a prescribed marketing plan, or significant control or assistance in the operation, or a community interest, and 3) payment of a franchise fee for the right to participate.
As the franchisor, you assume the role of working on your business, not in your business (a mantra made famous by Michael Gerber in his book, The E-Myth Revisited). If you are franchising Fit your job is no longer the business of running the individual fitness center, but the business of finding others to open and run more business centers. The beauty is that these people are paying you perhaps hundreds of thousands of dollars in fees and between 4% and 8% in royalties for that privilege - and that they are earning a living as well. Franchise companies added nearly 30,000 new establishments to the US economy in 2006, according to the International Franchise Association.
