is essentially a marketing technique used by many companies to expand
operations (distribute products and services ) without the owners
having to raise more money or capital themselves.
Business owned as a sole proprietorships,
corporations can all decide to franchise their operations. The
franchisor supplies the product or service to the franchisee who in
turn makes it available to the consumers. A franchise is license
granted by a corporation to sell a particular product or a service in a
given area and in many cases provides equipment, supplies and expertise
to a franchisee in exchange for a fee and royalties on sales.
Franchising is a two-way street. For a new
franchise to succeed, the
franchisee must agree to follow all the rules and regulations set out
in the agreement. In return, the franchisor often give the franchise
help to choose a good location, provide advertising, suggest special
promotions, and help to buy equipment and supplies. What's more, a good
franchisor will supervise quality control and keep you up-to-date on
new products and research. Some franchisors even provide accounting
However, not all franchises are successful. People who dream of buying
a franchise should investigate the parent organization and its rules
carefully. They should also talk to other franchisees before making a
Franchising isn't for everyone. If you are
too independent and too entrepreneurial to accept rules and regulations
which someone else has instituted, then franchising may not be for you.
It is a fundamental requirement in franchise system that each unit
within that system appears to be similar in almost everything.
Although franchising is an attractive alternative to being an
entrepreneur it may still be the risk of failure in the process of
developing and a full range of support services may not be in place.
There is a considerable difference between a mature franchisor with a
successful track record in an established market and a new franchise
system based on an unproved business concept.
There are many publications which list
available franchises, in order to avoid a costly mistake just shop
around to find out franchises that best suit your skills and taste.
Hire an accountant or financial advisor to evaluate the franchises that
Engage a lawyer who specializes in franchise-related matters to review
all of the documents and explain every clause of the franchise
Request a list of all franchisees with their
locations and discuss with a number of them success and profitability
of their outlets.
In some ways, buying franchise is like starting a business from
scratch. In other ways it is like buying an established business with a
recognized name and product.
The cost of buying a proven franchise is high because the risk is
Many people feel that buying a franchise is good way to get started in