Is Franchising the Right Growth Strategy?

Franchising is a popular way for many people to diversify their wealth and try to grow a branch of a business. However, it is not as profitable as people think. The startup costs for many franchisees is extremely expensive and not as clear as people think from the start. For example, the average McDonald’s franchisee opener reported to have only have made about $50,000 in profit after all expenses. With an upfront cost of over a million, that is not great return.

Key Takeaways:

  • Franchising can accelerate growth, facilitate breaking into new markets, and bring in local knowledge and connections.
  • Franchising also means creating an ever-larger group of stakeholders and surrending some power and control.
  • Whether to grow internally or franchise is a complex issue that must be decided based on individual circumstances.

“One benefit of franchising versus corporate growth is the diversity of great partnerships we are able to build with other passionate and entrepreneurially driven franchisees. In 2017, we started building our franchise operations, and ever since we have been able to bring Pokéworks to more markets than we would have been able to solely with the corporate growth path.”

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