Purchasing Cooperatives: Opportunities and Challenges

05/01/2010

Attention franchise executives: During your next franchise convention, you may be able to walk into a room of franchisees and tell them that next year, you will help them save money every time they purchase goods for their business, perhaps 5 percent, 10 percent or more, you will give them a simplified way to procure goods and services, and at the end of the year, they may very well get cash back for participating. Would you have their attention?

When prices for raw materials and commodities rise sharply, businesses respond with innovation and often, advancements in collective purchasing. Purchasing cooperatives have been successfully used to provide discounts and innovation in the delivery of health care, electricity, goods and services for governments, school districts and franchise systems. Purchasing cooperatives are certainly not a new idea, but with commodity costs spiraling upward and businesses’ success dependent more than ever upon their ability to realize profits from thin margins, franchisors and franchisees alike are giving cooperative purchasing renewed attention.  

Excerpted from Franchising World. To view the full article, click here.

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