I wrote a post a few weeks ago about the pros and cons of choosing to buy a franchise as a way to start a business. A new study from Cornell Hotel and Restaurant Administration Quarterly linked by Docuticker looks at franchising from the other side of the relationship: the franchisor. It found that two types of restaurant chains benefited from using a franchising model to grow.
The use of franchising by the manager-scarce and money-scarce franchisors supports the concept that youthful companies take up franchising to gain access to resources in an economical fashion.
Using a franchise model helps push the cost of development onto the franchisees allowing more rapid growth.
Businesses that had more experience and more resources tended to favor, and performed better, by growing their businesses through company owned stores. Given the headaches that can come with franchisee relations, it is probably wise to only use a franchise model when resource scarcity offers no other alternative.
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