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FranFinders – Franchising 101

I get asked many times, “What is a Franchise?” or, “How is different than a regular business?” or, “Is it worth the cost?” Below, I address the simplest question. “What?”

A franchise is simply an agreement between two independent parties which grants certain rights and set obligations to the franchisee from the franchisor. Ultimately, this agreement is the foundation of a successful franchise system. Some of these rights and obligations consist of (and are not limited to):

-Right to market a product/service under trade name or trademark or particular operation methods.

-Obligation of Franchisee to pay Franchisor for rights.

-Obligation of Franchisor to provide proper training.

Advantages of Franchises

Some of the advantages of franchises are:

-Increased chance of success because is a proven service/product;

-Efficient operations direction;

– Start-up assistance with training and support;

-Franchise may provide financing assistance.

The Future of Franchising

As markets continually fluctuate and job uncertainty prevails in minds of most employees, the need for predefined systems for starting a business with continue to grow. Franchises, which are proven systems, will help meet the growing demand. Regarding trends or “hot franchises,” it seems that brands in segments that are popular get noticed more frequently. While it is good to be aware of trending consumer patterns, it is more important that the franchise system is sound and able to withstand the demands of a fast-growing market. Ultimately, with the growth of small businesses, franchises will continue to fill the market’s need for a proven, predefined business model.

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