Tweet

Franchising as an Alternative to an IPO?

Guest post by: John Power

Article Overview: An attorney aske me if I offer franchise development as an alternative to an initial stock offering. Interesting. In response I wrote this article.

Franchising as an Alternative to an IPO?

I was once discussing my franchise consulting work with an attorney, who responded, "Oh, so you help companies prepare to sell franchises, as an alternative to going public?" I thought this was an interesting observation, and one that bears a bit of comparison.

Issuing an IPO:

• Requires a successful model or what can and will be a successful model!
• Market for offerings is limited
• Costly to undertake (Six figures, plus, perhaps)
• Can result in an enormous financial reward
• One strong and successful offering may be all that is required
• May be difficult to execute or control a successful outcome
• Extensive regulation and compliance requirements
• Can be a strong exit strategy!
• The IPO market is limited at this time
• However, realistically is not available to most small businesses

Franchising a Business:

• Requires a successful model
• Opportunity to sell franchises as a way to build a business
• Modest cost (Can be $2,500 to $12,000 to get started.
• Financial reward usually builds over several years
• Requires several, or many, individual sales
• Flexibility in controlling the success, and making adjustments during the offering
• Moderate regulation and compliance requirements
• May require the sale of the franchise company to implement an exit strategy
• Many small businesses can undertake a successful franchise program

It is easier, and less costly, to develop a franchise program than execute a successful IPO. Many small business companies can successfully begin selling franchises, even though an initial public offering may not be a possibility. Some of our local clients that have successfully developed a franchise program include: Yogis Grill, Valley Goldmine, and Zounds Hearing Aids.

The franchise company will be boosted by the success of their franchise sales, and system, and the franchisor can exercise flexibility and control in the development of the franchise system.

Yes, we would say that in many cases franchising can be a successful alternative to a stock offering. Franchising can be a very beneficial development and expansion strategy.

Related Articles
  Franchising Overview
  The Top 7 reasons why Franchising is Better than a Brand New Business
  I Want to Take My Business to the Next Level
  Newsworthy Trends in Franchising
  What is franchising? My personal definition!
  Franchising Is a Better Path to Success than Opening a StandAlone Business
  Fearing Franchise Losses
  Franchising vs. Licensing
  Franchising can change the world
  FRANCHISING PERSPECTIVE
  Successful Franchisee Traits
  Financing Your Franchise Business
  ARE FRANCHISES CHANGING WITH THE TIMES?
  Franchising Can Be a Legal Money Machine
  How to franchise your business
  Getting the Best Out of Your Franchise Agreement
  Factors to Consider Before Choosing a Franchise
  Funding the franchise business - franchisor
  Why Owning a Franchise is a Better Way to Business Success
  Why You Should Work With a Franchise Consultant

Article Tags: compliance requirements li li, compliance requirements li li, exit strategy li li, financial reward li li, franchise program, franchise program, franchise program, franchises, franchises, franchises, li li, li li, li li, li li, li li, li li, li li, li li, successful model li, successful model li



Related Forum Posts
Re: Re Franchise etc - [quote="bmueller47":e0j0nu4t]Can you see a shift of various types of franchises? What I am thinking about is that today it is more difficult to create franchises, that has great appeal. More and more people want to have their business, but no interference of someone else.[/quote:e0j0nu4t] Not sure what you mean exactly but it is certain that more and more people want to have their own business but not more and more people know what they really want to do, or how to do it. And that's what franchising is all about. Franchising is not for an entrepreneur. An entrepreneur will do his own thing. People who buy franchises want a turn key business, with a proven model. Franchising in the US had never been that good. I don't have the exact numbers in mind but I know for sure that franchising is growing more and more as people are getting more and more aware of this business model.
Franchising vs. Licensing? - What is your opinion on Franchising vs. Licensing? Which is better?
Nominations for a new Franchising Moderator! - Is there anyone you'd like to nominate as our Franchising Moderator (or volunteers for the position)?
Great Article, chock full of info. - Ian, Thank you for linking your article regarding Licensing vs Franchising. Its a good read.
Re: Hello from Captain Franchise - Hi BuzzAroundBooks, I actually found the site in my search for franchise networking. We're looking to make connections and also inform the general public about franchising. Franchising is often misunderstood because of the lack of knowledge. We're here to help and learn as well! Thanks!


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Starting a Business a Brave Move or a NoBrainer

What is an Adaptive Organization

Are You Reaching Out?

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.