How is franchising different to other third party relationships?

Franchising offers perhaps the best risk - control ratio out of all methods of growth available to businesses.

As can be seen on the graph, more traditional ways of distributing goods or services, such as agents or distributors may reduce financial risk but do not allow the principal to exert any real element of control.

Mediums such as subsidiaries or joint ventures allow a higher degree of control but involve a far greater degree of financial risk.

Franchising allows a greater degree of control - especially over the more important issues such as branding, methodology and mergers, while substantially reducing the financial risk as it requires a lesser investment of capital by the franchisor. This in turn enables a higher rate of controlled growth as compared to more common forms of corporate development.