In the current economy, it can be daunting to start a new business. In fact, it may be impossible for you to start one since small business loans are so hard to come by. In franchises, you become a small business owner, but you are also a part of a larger group. This means you not only have an established product people trust, but you also have a group of other small business owners who are there to back you up and help you succeed.
In simple terms, franchising is a type of business agreement. You, the franchisee, agree to buy a store and run it under the terms and conditions of the franchisor (company) which are spelled out in a franchise agreement. You use their name and run the store in a specified manner, and in turn you get assistance from them to improve the success of your business.
What they provide you
The biggest thing provided by a franchisor (the company selling you the right to use their name and sell their products) is name recognition. While you’ll be required to abide by specific rules like having to sell certain products and do things in a certain way, you’ll also be much more likely to succeed and often have a loyal customer base before you even open your doors.
What you provide them
In short, you provide the franchisor with money. You pay them for the rights to use their name, logo, and generally you buy the products you sell through them. You give the franchisor the ability to make this money without having to be worried about running each individual store, tracking individual employees, or keeping track of inventory and products. While they will still keep an eye on your store to ensure it is being run to their standards, it will require much less effort on their part.
Beyond the basic idea, your individual agreement depends on which franchisor you choose and the terms you agree to in your contract. Each company has their own way of doing things, which may change with time. And each state has different laws governing businesses specifically related to franchising.
When looking for at franchise opportunities, look for a company that fits your needs in several areas including:
* Fees and a fee structure that you can handle
* Support when you need it, like training employees, opening your store, or with problems you may have down the line
* Good relationships with their franchisees
* An advertising campaigns that fits your budget, location, and clientele
* A strong customer base and name recognition for your prospective customers
* Rules and regulations that fit your needs and preferences
If done properly, franchising can be a great way to provide a stable income.