A business may increase growth by building additional outlets regionally, nationally, or internationally. Depending upon the nature of the business, this could mean adding additional retail locations, additional manufacturing facilities, additional sales offices, additional distribution facilities, etc.

 

The advantages to this method of expansion are:

(a) the company retains complete control and flexibility over the expansion process, including timing, management decisions, employment decisions, policies and procedures, resale prices, and customers; and

(b) the company retains all profits from such expansion.

 

The disadvantages are:

(a) such expansion may require significant capital expense;

(b) the company assumes all risks of loss if any one or more of the additional outlets are not successful;

(c) the company’s managers may not have the same incentive or motivation as a distributor, licensee or franchisee;

(d) potential liability for the actions of the company’s managers and other employees;

(e) the company has additional employment related expenses and liability exposure (payroll taxes, benefits programs, labor problems, employment law issues); and

(f) multiple state tax and business license expenses.