Page 164 - 100 Great Marketing Ideas (100 Great Ideas)

78 SHARE THE WEALTH

Everybody wants to grow the business. Gaining more market
share, winning more customers, and (ultimately) making bigger
profits are all goals the directors eagerly aim for.

For most firms, though, restraints on capital limit the rate at which
the company is able to grow. Working capital quickly runs out, and
in any case most small firms rely on borrowed money that has to be
paid back on the nail—unlike major firms, which can sell shares
and only have to pay out if the company is profitable.

There is, however, a way to break the deadlock—franchise the
business format.

The idea

In the early 1950s, Holiday Inns started in America. The company
had a good business format, and developed a clear brand image that
conveyed a mid-range, comfortable hotel for business users (during
the week) and family users (at weekends).

The problem for the company is that new hotels are expensive items.
Building a hotel is costly and time-consuming, but Holiday Inns did
not want to go the route of buying up existing buildings since they
wanted to retain their branding intact.

The answer was to franchise the format. Holiday Inns are almost
all owned by the people who run them. The parent company helps
prospective franchisees to find appropriate sites, build the right
hotel, train the staff, create the appropriate decor, and market the
hotel. For the franchisee, being given a complete business format

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