As recently as the early twentieth century, most businesses were single-location, single-owner firms. Many businesses follow a franchise model today, with popular examples being Anytime Fitness, Subway, and Cinnabon. Why have many single-location small businesses struggled to compete with the franchise business model? Economies of scale. This simple term describes the exponential advantages gained with each doubling of the size of any business. True, franchisors benefit from lower rates on bulk orders of supplies, but they also gain tremendously from accrued knowledge, experience, and brand recognition.
Every new business requires thousands, if not millions, of pounds in startup costs before they generate their first sale. Countless hours are spent simply formulating the business strategy, imagery, and marketing tactics. This can create tremendous pressure on a new business, especially first-time business owners who have to take out hefty loans to finance their dreams. Not every new business is destined to succeed, no matter how hard the owner might work. Now, let’s look at a franchise uk business model for a noteworthy contrast. Every franchise starts out as a small business struggling to find its niche in the market. Once it does, sales can go supernova as business booms, and more branches open up. Of course, once a franchisor finds a business strategy that works, they generally like to stick to it. This can create tremendous exponential returns in their business model. Each new branch of its franchise can skip the laborious process of figuring out its brand’s story and strategy. All they have to figure out is how to implement it in their specific area.
