The most noticeable problem for entrepreneurs/business owners while looking into expansion are shortage of cashflow/capital and lack of manpower/difficulty in hiring. How could entrepreneurs/business owners turn those problems into advantages? By its very nature, through franchising your businesses reduce the risk of debt, as the franchisee will have to provide the capital to start and operate a single unit outlet or more. Thus, allowing the entrepreneurs/business owners financial leverage to ensure the companies to grow using the resources of others (franchisees).
Franchising your businesses does not only allow financial leverage, but too allows the companies to leverage on human resources/manpower as well. Entrepreneurs/business owners will not be responsible at both operational and management levels of the individual units/outlets. The staffing leverage and ease of supervision means that the companies could run in a profitable manner.
Since franchisee have to pay a certain percentage of royalties on a monthly basis to the entrepreneurs/business owners. The combination of faster growth expansion of units/outlets, increased in profitability and lower the risk of debt will helps the companies to compete with much larger businesses so they capture a market leadership position before the competitors could encroach on the market space.
