and Directors
Franchise Consultants to Grow Your Revenues and Profits
There are many different industries which benefit from Franchising with the list continuing to increase. This is because franchising can be an extremely effective method of growing your business with minimal investment required in premises, operating equipment and staff. Franchisees actually fund this business expansion for you.
One of the key advantages of franchises is that franchisees are usually highly committed, capable and motivated individuals who put their own money up to buy a franchise. As a result of this investment they are very committed to making it work.
Franchising Income Streams
The key determinants of your success will be:
- The Franchise Model
- The success of your franchisees
- The number of franchises you sell
- The size of each franchise area
There are several income streams that franchising can provide for your business depending on the type of product or service that you provide. These include the following:
1. Franchise Fee
The Franchise Fee that franchisees pay upfront can vary from £3,995 to £350,000 or above. The fee will cover the opportunity, the cost of the training, some business set up costs, and opening stock (where appropriate). The remainder of the fee goes to the franchisor.
2. Monthly Fee
Many franchisors charge a monthly management fee to cover the support costs of managing the franchisees. This size of the monthly fee will vary depending on the support being provided.
3. Percentage of Revenue
A percentage of franchisee revenue could form a significant part of ongoing income for a franchisor. This can be charged in addition to the monthly fee or by itself. Percentage usually range from 5% to 20%.
4. Sole Supplier To Franchisees
Many franchisors will supply the goods that franchisees need to operate their business.
5. Backend Income
Many businesses have backend products and services. A franchise allows you to grow the volume of these products and services that you sell.
6. Buying Power Discounts
Your buying power increases as you build your franchise sales. This enables you to improve margins and profits as a result.
Example Earnings From Franchising
Upfront Franchise Income
If your business had 75 franchisees who each paid an upfront franchise fee of £20,000 this would generate £1.5m in upfront franchise income before expenses.
Backend Income From Franchising
If each franchise then generated an additional £15,000 per annum in backend income for you this would increase turnover by an additional £1.125m per annum.
The above figures clearly show the significant effect that Franchising could have on the turnover, profits and capital value of your company. It is definitely a Business Growth Strategy worth thinking about.
