Management
Business Case Study; Franchisor Cash Flow Remedies
One thing that new franchisors need to be careful with is watching their cash flow. It takes about one to two million dollars to adequately set up a franchising program for an existing company with a viable prototype already in place. It is wise for franchising executives to consider the need to conserve and watch outflows like a hawk.
Indeed there are ways to replenish funds if a new franchisor entrant blows thru their investment capital. Many franchisors fail merely because they did not have the money to hold the rocket ship together as rapid expansion took place and more and more franchises were sold. If not the market will end their game.
Often expanding new franchisors will need additional investment capital. A franchising arm of a larger Corporation can become a severe temporary liability for the company during rapid expansion, even as massive amounts are coming in from sales, lots is going out to handle it. The money in franchising is made from royalties over time and the franchising company must spend in the beginning to secure a stable royalty income flow.
Those companies which find themselves in severe cash problems there are ways out of this such as an IPO, Investment Banks, additional partners, vendors loans and other strategies. Although I have seen an overseas Master Franchise deal or two bail a company out of their problems.
Selling the rights to entire countries for the brand name can bring in millions of dollars quickly and of course being IFA International Franchise Association connected it can help make these things can happen too, I have seen it before. Business Management and MBA schools should teach these things, although generally I see little of that. Many companies these days opt for dealer, licensees or Franchisees and therefore these issues are important considerations indeed.
Lance Winslow - Online Think Tank forum board. If you have innovative thoughts and unique perspectives, come think with Lance; www.WorldThinkTank.net/wttbbs/ |
Lance Winslow
Tags: Business Case Study, Franchisor Cash Flow RemediesSimilar articles
Building A Practice On Purpose Series Part #6 - Forge A Practice On Purpose Operating System
We're all familiar with the importance of our computers having a dependable operating system, if for no other reason than we may have experienced the contrast of NOT having one. Read more →Business & Family Safety and Health Rating
For good reason, practically every endeavor in life is rated. I've seen ratings on who or what's #1 in business, industry, NFL, NBA, MLB, person of the century, athlete of the century, technology, restaurants, university, neighborhoods, travel destination, best looking, best movie, best book, etc. Read more →Business Development
The essential stage of any businessBusiness development is an essential stage of any business. Either it is in the beginning of the road or it is in the middle of the road. Read more →Business Innovation - Tacit Knowledge
Creativity can be defined as problem identification and idea generation whilst innovation can be defined as idea selection, development and commercialisation. Read more →Aphorism
He replied, "Compound interest."
Albert Einstein