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What is Franchising?

Written by: Tom Parsley

Article Overview: Franchising offers an excellent opportunity for you to be in business for yourself. When you hear the word " Franchise" you probably think of fast food restaurants such as Burger King, McDonald's or Subway. But the truth is Franchising is so much wider than that.

What is Franchising?

Franchising offers an excellent opportunity for you to be in business for yourself. When you hear the word " Franchise" you probably think of fast food restaurants such as Burger King, McDonald's or Subway. But the truth is Franchising is so much wider than that.

In simple terms, franchising is where a successful business format is replicated. This involves developoing all the systems and procedures the franchisor has found to be most successful. Anyone joining the franchise will be expected to operate the business using these tried and true systems.

There are franchises available in almost every business category that you can think of, and acros all price ranges. In addition, because franchising has such a low failure rate, especially when compared to starting a business from scratch, a franchisees chances of success are extremely good.

Compared to starting your own business from scratch, franchising can provide a relatively safer route into self employment. The franchisor has established a tried and tested path through the maze, and will have eliminated many of the mistakes that are often made when starting a business. It is this experience and system that you are paying for when you buy a franchise.

While franchising is a safer route into becoming an entrepreneur, it is not just a question of signing up, paying your money and being successful. The franchisor will not do your work for you and cannot be expected to. What is supplied is a proven format, a brand name, support and guidance. It will be still be your hard work and skills that make your business successful.

As a franchisee you will have access to market knowledge, established name awareness in the business sector that you will be operating in, training and marketing help. You will often take part in and contribute to national advertising campaigns which would otherwise be outside your reach.

Financially, you will pay the franchisor an initial franchise fee and the costs of establishing the business, including any equipment, facilities and supplies necessary, together with the costs of operating the business until it is cash flow positive. Once established, you will normally pay the Franchisor a monthly payment based on your sales. This is known as royalties or monthly management fees. Effectively this is where you are paying for the ongoing support of the franchisor and his team. As the royalties are based on your revenues, it can be clearly seen that it is in the Franchisor's interest to help you succeed.

A successful franchise relationship is like a partnership. It combines your talents with the experience and knowledge of the franchisor.

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Article Tags: advertising campaigns, becoming an entrepreneur, burger king, business category, business format, business sector, failure rate, fast food restaurants, franchisee, franchisees, franchisor, initial franchise fee, market knowledge, marketing help, national advertising, self employment, starting your own business, successful business, support and guidance, true systems



Related Forum Posts
Re: Re Franchise etc - [quote="bmueller47":e0j0nu4t]Can you see a shift of various types of franchises? What I am thinking about is that today it is more difficult to create franchises, that has great appeal. More and more people want to have their business, but no interference of someone else.[/quote:e0j0nu4t] Not sure what you mean exactly but it is certain that more and more people want to have their own business but not more and more people know what they really want to do, or how to do it. And that's what franchising is all about. Franchising is not for an entrepreneur. An entrepreneur will do his own thing. People who buy franchises want a turn key business, with a proven model. Franchising in the US had never been that good. I don't have the exact numbers in mind but I know for sure that franchising is growing more and more as people are getting more and more aware of this business model.
Franchising vs. Licensing? - What is your opinion on Franchising vs. Licensing? Which is better?
Nominations for a new Franchising Moderator! - Is there anyone you'd like to nominate as our Franchising Moderator (or volunteers for the position)?
Great Article, chock full of info. - Ian, Thank you for linking your article regarding Licensing vs Franchising. Its a good read.
Re: Hello from Captain Franchise - Hi BuzzAroundBooks, I actually found the site in my search for franchise networking. We're looking to make connections and also inform the general public about franchising. Franchising is often misunderstood because of the lack of knowledge. We're here to help and learn as well! Thanks!


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