A reader asks:
What Exactly Is a Franchise?
A franchise, in its simplest definition, is a business opportunity that allows the franchisee (possibly you) to start a business by legally using someone else’s (the franchisor’s) expertise, ideas, and processes. This concept is called franchising.
In some cases, this means also having the right to use the franchisor’s established name and branding, as well as their already-tested business model. Other times, this means the right to resell (or distribute) a franchisor’s product.
Basically, a franchise gives you, as the franchisee, the right to use someone else’s business system. As a franchisee, you purchase this right by means of an initial fee. You must also operate your business in accordance with a contract, called a franchise agreement. In return, the franchisor maintains the business process and you agree to operate your business according to their model.
Fast Food Restaurants Are Popular Examples
The most familiar examples of franchises are probably fast food restaurants. For instance, Wendy’s, McDonald’s, and Burger King come immediately to mind.
However, the important thing to note is that these franchisors are not just selling burgers. They’re selling a consistent way to run a business that sells burgers. This includes marketing, advertising, and recipes. Even more important, it includes the look and feel of the facility from which you, too, would sell burgers. And significantly, it includes the well-known branding that goes with that system.
Franchises Are a Big Part of Multiple Industries
Fast food restaurants are not the only examples, even though their success is probably what brings them first to mind. Just about every industry you can think of includes a successful business practice sold as a franchise. For example, there are franchises for janitorial services, tires, dry cleaners, haircuts, and more. As a matter of fact, there are as many different business systems for franchises as there are goods or services that people wish to use.
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Who Should Invest in One?
If you want to go into business for yourself but you’d rather not build your business from scratch, franchising could be the right choice for you. As we’ve mentioned, multiple industries offer opportunities for franchising, and it’s not difficult to search them out.
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Be sure to do your due diligence, though. You want to work with a franchisor who will treat you right, someone who will train you and work with you to get your business up and running, someone who will be available if you need them, every step of the way.
So talk with other franchisees, especially those who are in the chain you’re considering. Ask lots of questions and be sure you’re satisfied with the answers you receive. Also, you should be aware that you’ll need to go through an interview process with the franchisor, as well.
Is Franchising Right for You?
Is franchising something you should do? Only you can make that decision. But if you want to start your own business and you feel you need a good bit of guidance along the way, franchising could be just the thing for you.
If you’re interested, check out some of the franchising opportunities we write about here on the Business Opportunities blog: