Franchising leverages a business owner’s system of operations to provide an opportunity for people to get in business for themselves utilizing a proven business model. Franchisees act as independent business owners and are not working for a manager, director, or boss, they work for themselves.
Franchising creates a secure revenue stream with franchisees that are dedicated to their own growth. Royalties, which are paid off of gross sales, increase as franchisees become more successful with their business. Franchisees are putting up the money and the time to build their franchise and are rewarded off the bottom line. The motivational issues and managerial oversight that are required in corporate expansion are not as prevalent in franchise growth. This cycle of growth creates a terrific source of predictable revenue which creates a safer transition of ownership and strong interest from private equity firms and investors. It is for this reason that franchise companies are typically valued at 7-10 times EBITDA, several times higher than the average 5 times valuation for business.
When the owner of the company sells or retires, franchisees are still responsible for their own stores and generating profits for themselves, a trait which transcends all exit strategies.
Is NOW the time to franchise?
The issue of exit strategies is one of the many topics of Francorp’s online “Franchise A Business” seminar. To learn more about franchising, or how to franchise a business, visit http://www.francorp.com or call 800-372-6244. Also, visit http://www.francorp.com to download the free e-book and take the franchise quiz today!
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Founded by Don Boroian in 1976, Francorp is the worldwide leader in franchise consulting and development. While at Francorp, clients receive expertise and industry experience needed to help you expand your business in the direction of success.
For over 36 years Francorp has franchised over 2,000 businesses and consulted with over 10,000 different companies dealing with franchise expansion. Catering to the entrepreneurial mindset, Francorp provides an “all under one roof” approach which allows for you to focus on your business and have one single point of contact and consultation. From beginning to end, Francorp has professionals working with you making sure everything is done efficiently and effectively.