30 Jan Selling a Franchise
One of the most attractive factors of a franchise is its scalability. Have you ever stepped foot in two different Wal-Marts? Have you ever noticed that even if they are in different states they are virtually the same? This is because they have developed a process that is so effective that they do not want to change anything between stores. In fact, when I was in England I walked into ASDA, which is a byproduct of Wal-Mart and it was still the same. I almost felt like I stepped back into the U.S.A.. The process works so well that they can take it nearly anywhere and make one store just as profitable and the next. Now Wal-Mart did face some challenges when it went to Asia because the people there have a different culture that did not fit as well for Wal-Mart.
The point is that a franchise is attractive because it is scalable. If you are looking to sell a franchise business it is important that the system is effective enough and simple enough that nearly anyone off the street could step in a run the operations. Once you have developed a system to that point then the franchise opportunity will appeal particularly attractive to investors.
Something like what was just described is particularly attractive because of the risk versus the reward. It use to be that if an investor wanted an eight percent return he could just buy a treasury bill or bond and he would take on virtually no risk. Today if you want that type of a return you will need to take on some form of risk. A franchise gives an investor the opportunity to earn that return, and sometimes higher, with a minimal amount of risk involved.
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