Overall, I believe that if it’s done correctly, and in the appropriate framework, that it lowers your business risk, let me explain how that works.
Well, one of the things that significantly increases risk is having to increase your debt. So when you look at what franchising is, it is a model in which you are able to generate working capital, in order to expand and scale your business, that’s one of the key benefits of the franchise model.
Instead of you actually going through and developing your business in various geographic locations, whether it’s within your own zone or state or nationally, you’re able to effectively scale your business, whilst using the working capital, and the funds that you acquire through the franchise model.
So by being able to so what that means is expansion is always funded with capital, non debt capital. And so that would significantly reduce your risk.
The other part of it is when you’re looking at expanding in new areas – geographically – there are different needs when running your business in these various geographic locations. From our experience we have found that it varies from city to city, certainly from state or province to province, and certainly across different countries. So one of the advantages of the franchising model is that you engage people to join your business, who are business owners, but also have local knowledge and local expertise networks.
So instead of you having to take all the risk in the in entering into new geographical markets, you’re able to share that risk effectively, by bringing or lower that risk by bringing onboard people who not only have an investment or some skin in the game, but also local presence, local networks, local knowledge, and the ability to get things done in that local zone.
So that’s another aspect that will significantly reduce your risk as well.