The benefits of franchising as a means of expanding a business are twofold. One, it involves low capital investment by the franchisor as the capital used to expand the network comes from franchisees. Two, by franchising the business, the franchisor places the expansion of his/her business in the hands of people who are motivated to make it work.By using the capital and support of franchisees, the franchisor is able to establish a large number of outlets in a short period of time. Rapid expansion can be achieved without incurring the overheads and costs associated with opening company-owned outlets. This brings benefit to both the franchisor and franchisee as it helps build consumer recognition quickly and establish the franchise.The cost of expansion for the franchisor is usually limited to the cost of franchisee recruitment, training and assistance prior to opening. Franchisees invest their own equity and borrowed funds in premises, equipment, fixtures, furnishings, inventory and the working capital necessary to establish a franchise unit.The return on investment is much higher for businesses that expand through franchising. Because there is less capital employed, the franchisor’s profits are generated on a much lower capital investment. Franchising also allows for the business to expand without spreading managerial resources across too many business units. A business owner may wish to keep his/her own operation small and tightly run. Operating more than a few outlets can drain business resources. A franchise system requires less management than a company owned chain of outlets. Franchising has added attraction for expanding a business into foreign markets particularly those that are different, as most foreign markets are, to the franchisor’s home market. By using indigenous franchisees, the franchisor is tapping into local business knowledge which may prove beyond his or her capability to obtain otherwise. People who know the local scene well deal with legal and cultural differences more easily than an overseas company executive would.Whatever the advantages of expanding a business through franchising, neither it is without its disadvantages nor it is easily done. Successful businesses with franchisable concepts have failed to successfully franchise. Companies must meet certain criteria before embarking on the franchise route. Even when they have met those criteria, prospective franchisors must be to ready to invest both money and time in the development of the franchise system. While it has its advantages, it is not a simple means to expansion.