Low-Cost, High Volume Strategies For Franchisees and Franchise Chains

There is really no such thing is a recession proof business and it really doesn’t matter if you own a small business of your own, work in a large corporation or a franchisee of a franchise system, which is the leader in the market place. One advantage that franchises have over other small businesses is their buying power and their economies of scale. This allows franchises to lower the price and still retain a profit while other small businesses cannot.

Most small businesses just do not have the buying power to make high volume purchases from vendors. A smart franchisees system in the middle of a recession can often use a low-cost high-volume strategy to acquire the largest market share in their industry. This works both on a community level and in large regional markets. Sometimes the franchisees will get upset with their franchisor for offering steep discounts to customers. When McDonald’s told their franchisees to add more items to the $1.00 menu many franchisees complained and even refused to do so.

They did not want to sell the hamburgers, French fries or other products that cheap. This is understandable because the franchisees wished to maximize their profits, however it is shortsighted thinking because by offering low prices they increase their volume, referrals and repeat business, while other small businesses that may sell hamburgers, French fries and other similar items could not reciprocate in such a price war and thus, went of business. A franchisee should really consider low cost, high volume strategies when their franchise system moves into position to gain market share during hard economic times.

Source by Lance Winslow