Many entrepreneurial people interested in starting their own business often overlook franchise ownership as a viable and rewarding career. Owning a franchise can provide autonomy as a business owner and employee, with support and reduced risk that is less available when you start an independent business.
Essentially, a franchise is an agreement or license between two parties, the franchisor and franchisee. Franchise.org defines the franchise relationship as the granting to one or more persons (the franchisee) the “rights to market a product or service using the trademark of another business (the franchisor).”
The franchisee is also granted the rights to market products or services using operating methods of the franchisor. The franchisor must provide these rights and support the franchisee in a general way, while the franchisee is obligated to pay the franchisor specific fees and royalties in exchange for these rights. The fees, royalties and all conditions of the agreement depend on the franchisor. Some franchises are quite expensive, while others are very affordable.
Benefits of a Franchise
Many franchisees are entrepreneurial and were interested in starting their own business before they ultimately chose a franchise. There are some prominent benefits to owning a franchise versus starting your own business. Here are some of them:
Trade Name – As a franchisee, you have the rights to an established trade name, marks, logo and style. If you were to start your own business, it would take time to conceptualize a trade name and image, as well as achieve name recognition.
Known Product or Service – From day one, your product or service will have public recognition and acceptance as a franchise. If other franchises in the network have a sound reputation, this will be a significant benefit.
Training – If you are just entering the franchise business or changing your career, training is essential. A franchisor will be able to provide you with technology, financial and staff management, and other necessary skills to operate the business.
Advertising – National advertising is undertaken by the franchisor with local advertising up to you. The franchisor will provide guidance and materials to execute local advertising.
Ongoing Help & Support – The franchisor will serve as a source for trouble shooting when required. Field staff may also be available to help prevent any build-up of problems.
Is Franchising for You?
As a potential franchisee, there are many questions you should ask yourself as a starting point in determining whether franchising is for you. As with starting an independent business, take the time to research franchise opportunities as there is much involved and you are making a significant commitment. Ask yourself:
• Am I willing and able to take on the responsibilities of managing my own business?• Do I believe in the franchise and what it produces?
• Can I take direction from and follow the franchisor’s system?
• Do I like dealing and interacting with people?
• Can I afford the franchise?
• Do I have personal support to get through the challenges of starting and running a franchise?
Additional information about franchising is available from the American Franchisee Association (franchisee.org), the American Association of Franchisees & Dealers (aafd.org), and the Entrepreneur magazine website (entrepreneur.com).