• You can now expand effortlessly and manage efficiently.global nodes network image by Michael Brown from Fotolia.com
  
  Franchising is the process in which a company (franchisee) gets into a fully fledged business by using the proprietary knowledge, processes and trademarks of another business' (franchisor) in order to provide products and/or services. The franchisee pays certain fees to the franchisor and the latter has a say in how the franchise operates the business in spite of the fact that the latter is considered the owner of the business. This arrangement can have advantages as far as management is concerned.
  
  

Quick growth

• For companies desiring to grow rapidly and even venture into new markets effortlessly, franchising is proven to be an effective strategy. This is facilitated easily because the franchisor relies on the capital of the franchisee and does not have to wait to get its own resources to open up shop in different geographical locations and simply needs to license approved franchisees to represent the franchisor's brand.
  
  

Risk diversification

• Franchising lowers start up costs in new locations for the franchisor. This is facilitated by the fact the start up costs are fully absorbed by the franchisee. Should the business collapse, it is the franchisee that bears the full loss. Whilst the franchisor may at times assist in the franchisee accessing credit facilities, it does not contribute any monies itself.
  
  

Brand growth

• As a company opens franchises in different locations, people become more aware of its existence and helps increase in its recognition (branding). This can be extremely useful in penetrating new markets or as a marketing strategy against its competitors. Eventually, the desired end result becomes increased profits due to increased sales.
  
  

Perpetual income

• For the franchisor, franchisees imply a steady income stream due to fees and royalties collected from the latter. Royalties are usually calculated as a percentage of generated sales or profits of the franchisees. Continued marketing by the franchisor are also at times paid for by the franchisees, which in turn benefit the franchisor.
  
  

Management and training

• Probably the largest advantage of franchising is the training, management and control the franchisor provides. The franchisor has vested interest in how all its franchisees are run and subsequently has a say in their management and how they get run. Because of this, franchisors regularly conduct continued training on corporate standards and procedures that need to be adhered to in running the franchises. This contributes to quality control, pricing and types of products to be offered within its franchise network.