Franchising Your Small Business - the Fly Speck Part Three

Brand names breed familiarity. This will be debatable a topic but if you are out of town, hungry and confronted with an unknown restaurant and a known, which one will you most likely pick? Adveturesome folks might go with the unknown but in theory, the majority will go with the familiar.

This is one of the key aspects of building a franchise - building the brand name and thus the familiarity. "In short, franchising provides a much greater advantage to firms in industries in which brand names are an important competitive advantage." - Shane

A Labor Intensive Industry is Ideal

Franchises work better in labor intensive businesses because tthe operator of the franchise has an incentive to not shirk - he has a stake in the operating profits. Thus, he will watch expenses, including labor and will manage more effectively (in theory) than a business that is more capital intensive. (say a gym which is more equipment intensive.)