Why Franchise My Business?
Higher Valuation – Franchised business’ sell for 8-10x EBITDA
Save Money – Franchised Growth requires less overhead
Better Management – Less employees, more vested owner operators
Rapid Growth – Build a Brand FAST.
The industry average for a Franchise Fee is $35,000. Franchise buyers pay you this fee for the rights to use your trademark, servicemarks and business system. This fee is used to help supplement your business growth and cover the costs involved in training new franchisees as well as acquiring new franchise partners.
The industry averages for franchise royalties is 6% of gross sales. This percentage is paid typically on a weekly basis on the gross sales of the franchisee’s business. These royalty fees are paid as part of the ongoing rights to the trademarks, servicemarks and intellectual property.
Development of a secure and defined Distribution channel
Franchising is a marketing system that leverages a business model and allows you to sell more of whatever business you are in. Franchisees are dedicated to a particular business system, are required to operate with consistent standards and will be motivated to sell as effectively as possible. Franchise locations have been shown to perform 20% more efficiently than company locations.
Franchising requires the payment of an advertising fund and minimum advertising expenditure by franchisees. Together, these marketing contributions produce a powerful branding mechanism that allows a growing franchise system to promote and market effectively. Franchise grows brands exponentially faster.
Access to Capital
Franchises are given preferences when looking for funding and financing. Franchise buyers have significantly lower levels of failure than start up businesses do. This allows banks and investors to take on lower levels of risk when funding new locations of a franchise system. Bottom line, money becomes more available as a franchise system.
Franchise organizations are given higher valuations than company owned chains. The leveraged business model of a franchise system is valuated with significantly higher ratios than company owned units. The overhead and costs to manage locations are much less in a franchise model than in company owned growth.