Franchising Your E-Commerce Business

When you think about a franchise, you might envision restaurants, service providers and other brick-and-mortar stores. However, franchising your e-commerce business is an equally strong candidate for franchise expansion.

Just like physical stores, e-commerce businesses are successful because of the positive reputation their brand carries, along with a tested operation model. You can leverage these assets into a franchise system that creates unique growth opportunities and increased revenue.

Expand Your Business Without Traditional Costs

In general, e-commerce businesses have several important operating expenses:

• Manufacturing costs
• Inventory storage
• Shipping and distribution services
• Employing personnel to manage these operations

Many e-commerce brands reach a point in which growing their business internally requires substantial capital. You might need to buy or lease new storage space and hire additional employees to run the facilities. By using a franchise system, you can place the burden of these costs on the franchisee.

The traditional growth of an e-commerce business might also involve increased shipping costs as you extend distribution to new locations. With a franchise system, you can avoid having to pass the burden of extra shipping charges onto customers. E-commerce franchises can create a network of facilities that can distribute products to customers from closer distances and at more reasonable rates.

Venture into Physical Storefronts Through Franchisees

The benefit of e-commerce is being able to offer your product through online channels without the need for the added expense of a brick-and-mortar location. While expensive, physical storefronts do have some advantages. For example, they allow new and potential customers an opportunity to interact with your product in person. They can see and touch your product – creating an experience that can’t exist through a website.

You can use a franchise system to work with franchisees interested in expanding your business into traditional retail spaces. Using a franchisee to make the leap into storefronts can provide the benefits of expanded reach without the risk (e.g., paying for a lease and premises liability).

Earn Revenue Through Franchise Fees

With a franchise system, you don’t have to worry about taking the risk of expansion without seeing a reward. This is because you receive payment upfront from the franchisee in the form of a franchise fee. This payment is usually not tied to the success of the new franchise (i.e., not dependent on the franchisee’s profits). Rather, the franchise fee is compensation for licensing the use of your business’ brand, goodwill and operation model.

Next Steps for Creating a Franchise Model with Your E-Commerce Business

Franchise systems can apply to both e-commerce and brick-and-mortar stores. Either way, the advantage is a chance to earn a profit from the business’ goodwill without incurring the overhead expenses of traditional expansion.

Our attorneys appreciate the nuances that make e-commerce successful and know how to guide business owners in translating that success to a franchise system. If you have questions about the franchise process for an e-commerce business, please do not hesitate to contact us about a consultation.

Schedule a consultation with Franchise & Business Law Group about starting an e-commerce franchise.