Have you created a successful business and are wondering what your
options are to grow in today�s �New Normal?� Like you, many
entrepreneurs have created great businesses through hard work,
innovation, and simply exceeding the needs of customers in a local
area. But without access to significant capital, it�s challenging to
contemplate growing from a few locations to hundreds or thousands of
You�ve most likely invested hundreds-of-thousands of dollars to
build your business, secured trademarks, developed your brand,
documented processes, implemented technology, and hired staff. You
have a solid foundation. But in today�s economic environment, when�s
the best time to expand and do so in the smartest, risk-controlled
way? Here are five reasons why now just might be the best time ever
to expand your business:
1. Expand Your Thinking On Expansion:
You have a great local business. You know you have a product or
service that your customers want. Eventually there comes a point
when you begin to wonder how to reach more customers. The
traditional approach involves raising capital to allow you to open
more locations. True, this approach can grow your brand and allow
you to reach more customers, but it also means that expanding your
business is all up to you. You will be securing and signing for the
debt or outside equity and ultimately signing on the dotted line,
thus taking on the increased risk of expansion.
Another avenue for achieving growth in revenues and customers, with
limited capital and less risk, is through franchising. Though many
business owners do not consider it, franchising is a great vehicle
to help you reach more customers, promote your brand, and increase
your visibility and credibility as a brand.
2. Know The Leverage Effect:
In thinking of ways to leverage the large investments you have made
already, franchising can be a great way to scale your brand to more
markets, building upon those investments and years of fine-tuning
that made your business a success locally. Franchising links your
expertise and investments as the franchisor with the capital and
personal oversight of a franchisee to replicate your model in a new
You are able to leverage the passion, commitment, and capital of
franchisees to deliver your goods and services to more customers
across a larger geographic region. You may want to expand
regionally, nationally, or globally, and franchising is the least
capital-intensive (and most proven) way to do so, with less risk and
more upside than any other method of brand expansion.
Launching a franchise brand still requires an additional financial
commitment of several-hundred-thousand dollars by the franchisor to
lay and build the franchise system foundation. To open more
company-owned locations requires significantly more capital than
opening locations through franchising.
Given that lenders are facing a stricter regulatory environment,
record high and long-lasting unemployment rates, and less business
collateral, creativity and innovative ideas are required to figure
out the best way to expand with limited access to capital. The
beauty of franchising is that the geographical expansion into new
markets also uses the capital of the franchisees, in essence
allowing the brand to expand using other people�s money.
3. A National Strategy, Creating Jobs Locally
It�s not just about the money. In addition to taking less risk in
terms of capital investment, franchising mitigates the challenge of
trying to take your great local business and manage it in the next
state � or 6 states away. Franchising enables great local ownership
where business owners invest not just in your concept, but in the
community they serve.
Franchising helps spread the risk between the franchisor and the
franchisee. The franchisor has invested in the pilot locations and
secured their initial success. By experiencing mistakes and fixing
them to develop a solid business model that franchisees can
replicate, the franchisor has developed and protected the brand and
the systems that the franchisee can license and use in its business.
4. Succeed & Grow Together
Both the franchisor and the franchisee benefit from this approach.
Franchisees invest capital to grow their local business, but they
don�t have to spend significant amounts of time and resources to
figure out the business. As a franchisor, you�re licensing your
knowledge to them. In doing so, you will leverage the investments
you have already made in your brand and in your systems. In return,
you earn a stable revenue stream, normally based upon the revenue
results of your franchisees.
Franchising is also a powerful mechanism for accelerating growth.
Franchisees provide new sources of passion, ideas, and capital.
Franchisees work hard to build their local businesses and spread the
word for the brand and bring great ideas back to make the business
model stronger for everyone. Franchising is truly about shared
success � growing smart � with less risk than going it alone. Good
alone, better together.
5. Franchising: Be In Business For Yourself, Not By Yourself
The franchisee is acquiring the right to use the brand and the
systems to get started much faster and with much stronger resources
than they would on their own, and that right has considerable value.
Essentially, to be a franchisee is to be in business for but not by
yourself. The franchisor benefits in offering this opportunity to a
franchisee because it helps offset past, current, and future
investments in the brand and in the operating systems. When done
right, franchising benefits the company which wants to expand
geographically and benefits the franchisee who gets to learn the
business and execute the model at the local level.
Launching a franchise system is a big step � it requires evolving
your leadership and growing your business from a successful local
one to a larger regional, national, or international brand. You had
the passion, skills, and determination to get you to here. Yes, you
will need to learn new things to grow your business through
franchising, but you can do it.
You will be the ambassador within your organization that will set
the tone and the passion for the huge opportunity that franchising
can provide when it is done well and with absolute commitment to the
interdependent relationship with your franchisees. Franchising
provides a means for you to grow and expand your business, reach
more customers, empower others to own their own businesses and
create countless jobs. Enjoy the journey!
Shelly Sun is a Certified Franchise Executive and CEO and co-founder
of BrightStar Care�, with over 200 locations nationwide. She is
author of the forthcoming book,
Grow Smart, Risk Less: A Low-Capital Path to Multiplying Your
Business Through Franchising, which will be released October 4,
2011. It can be pre-ordered from