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Companies with a successful business model face the challenge of how to grow. Fifty years ago this was accomplished through slow managed company owned expansion, that was funded through internal profits and willing banks. Banks used to lend five times the companies net worth, which has now been reduced to one to two times net worth. While lower interest rates reduce the costs of the loan, they also have made the banks more selective on who they loan. Venture capital and the stock market are alternate sources of capital, but they come at a high price, giving up stock and a share of control. |
Today things are different. Company owned independents play less of a role, as retail channels are controlled by chains and franchises. Independents can not compete against rapidly expanding, nationally recognized and media focused chains. The chains market position rapidly grows, while the independents position dwindles. Franchising has thus become the preferred method of growth for those seeking planned expansion. |
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