Franchising to Grow Your Business

Have you heard of Secret Recipe? Here in Malaysia, when you hear ‘secret recipe’, you don’t think of Colonel Sanders or Coca-Cola, you think of scrumptious cakes and lifestyle cafés.

Secret Recipe started out as a single family-run café in 1997. Now just 13 years later, Secret Recipe has more than 100 outlets in seven countries. Their most recent? Pakistan. Can you imagine that? Secret Recipe cakes available on the streets of Karachi. Without a doubt, Secret Recipe is one of Malaysia’s most successful franchises ever.

Franchising is an excellent model for expanding your business. One of the main reasons why, of course, is because as a franchisor, your capital expenditure is shared by your franchisees, thereby minimizing your expansion costs. Franchisees also take over direct management of their own affairs, thereby giving you more freedom and opportunity to further expand or carry on essential R&D.

Communications and recommendations from your franchisees also help you maintain your product quality and advance product improvement. The larger your franchisee base, the more diverse your input will be, leading you therefore, to better business decisions.

Pooled resources between you and your and franchisees also cut costs on group advertising and group buying. Costs of equipment and materials for your franchisee, as a result, are potentially lower than they would be for an independent entity. This means higher profits for your franchisee and, ultimately more royalties for you.

Caution is necessary before you decide on franchising as your method of growing your business. Just because you have a great business idea and a fool-proof business plan, you have no guarantee of becoming a global franchisor.

This is because operating successfully as a franchisor requires different business skills than those required to run your original business. You can’t, for example, manage a franchising business the same way you manage a family-run cake shop.

Do keep it mind, however, that as a franchisor it’s important that the same values and the same respect for your product always remain in place just as they were when you started your original business. While franchising may be an excellent avenue for expansion, your mission is still to put quality products on the market for people to enjoy and benefit from. Remember, your business foundation is selling your product and not selling more franchises.