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FRANCHISING
BASICS
IS
A FRANCHISE FOR YOU?
A
franchise is a business opportunity arrangement
between an established company
and an individual, with
some shared contractual
and financial obligations put in place for the mutual benefit of both parties. It is a method of conducting
business by which
a franchise licensee is granted
the right to use a given trademark and tried and proven
products, services, methods, procedures, plans or
systems.
When
a franchisor sells business rights, his revenue is based on
the agreed initial franchise fee, and on-going royalties
and ad fees. The franchisee buys a business opportunity, which can
be developed to its full profit
potential.
From the
franchise purchaser's standpoint, the advantages of
franchising are many. According
to every source consulted,
failures are substantially
lower among franchisees
than among independent
business persons.
Franchisees generally
appear to be better
qualified owners and managers
from the start than independent businessmen in the
initial stages of the same line
of business. Financially, a franchisee
takes a longer term view
than a company manager.
The
franchisee, as the licensee of a franchise territory
or store, commands better
attention of the company
management. The franchising
system provides a mechanism
for selecting the best among aspiring entrepreneurs.
One big
advantage for the franchisee
is that his or her personal investment is normally less than it would be to start or buy a comparable business.
If a potential franchisee has to secure outside financing, the
lending agency is more
comfortable with the
franchise, assuming the
franchise has established itself
and is not a new and untried
concept.
The franchisor
is a continuing source of
know-how to the franchisee.
The franchisee can expect
training, the use of a recognized
name and image, a proven
method of doing business,
management consulting and assistance, new products and services,
and a protected territory.
He
or she can also
expect sales promotion
assistance and incentives, standardization of supplies, equipment
and signs, co-op
advertising and purchasing
power, legal and lease assistance, seminars and conventions,
continuous exchange of information with other franchisees
- and a greater value for the business once it is developed.
Not every franchisor provides
everything on this list but, except for limiting circumstances,
most of the better ones
do.
All
of the services provided by the
franchisor make it possible for an untrained, inexperienced person
to go into business and expect
to succeed. Finally, to a large extent, the 'continuing assistance'
program provided by most reputable franchising companies
eliminates, or minimizes, the problem of succession where there is death or disability of the major franchisee.
According to
the Bank of America, "Franchising
is a chain of small businesses
bound by the image and
policies of the parent company.
The person buying a franchise
does not buy his own business. He buys a success package from
a company who shows
him how to use it."
In
summary, the advantages of franchising are actual,
everyday, bread-and-butter working features of
the franchise system and
the successful franchise.
Kevin Clark, is Founder and C.E.O.
of Critter
Control, Inc.
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Franchise
Advice |
You’ve given it a lot of thought
and carefully considered the alternatives. You’ve decided
you have what it takes to succeed. You want your own business. More
specifically, you’ve decided you want a franchised business.
What do you do next? What can you expect
from franchise companies? How will you know when you’ve
found the right one for you? Let’s deal with these questions
in the order that you’ll face each issue.
Learn
More... |
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The Bottom Line |
Am I a Good Franchise Candidate?
With the knowledge that most new businesses are likely to fail
within the first few years, it makes sense to consider a franchise, as
the success rate is far greater. If you
are at the point where you are reading this article, you are probably
someone...
Learn
More...
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