Franchise Opportunities And Why You Should Franchise Your Business

 By: John Smarta
Franchise business opportunities are an increasingly popular way to people to get into business. Who can blame these people for going the franchising route? The name they will be operating under is already familiar, and the men and women operating these stores will be following an already established business plan that has been proven to work dozens if not hundreds of times before in other areas.

The Concept

So what exactly is franchising? Essentially, it is the process of one person or company (the franchisor, such as McDonald's) giving another person or group (the franchisee) the rights to operator under the first person's (or company's) name.

The Costs

The rights to operate a business franchise in a given area are usually sold, with the rate being anywhere from a few thousand dollars to a few hundred thousand dollars, depending on the popularity of the brand or store in question and the initial set up costs. After that, continued payments to the franchisor are determined by several factors, such as a percentage of annual turnover or mark-ups on supplies. In exchange for this, the franchisor is responsible for supporting the franchise network. This usually requires he (or she or them) to take care of the advertising, the development of products and all training programs, as well as all the centralized management required to keep the franchise up and running. The costs and overhead of such centralized management is usually much smaller for a franchise network than a business directly operating satellite stores across a region, and a well organized franchisor with skilled staff can take care of all management from a single location.

What You Have to Do

The franchisee, in turn, runs his or her individual store front, and is responsible for taking care of everything needed to make that individual store function. When acquiring the right to operate a business under someone else's brand, the franchisee is usually responsible for leasing a building or lot, hiring and training all employees, and other tasks associated with starting your own business. The franchisor will, of course, provide guidance and help where necessary, but it is the franchisee that is responsible for getting everything done.

The appeal of franchise opportunities is that, while the franchisee does have some degree of freedom in terms of how he or she runs the individual store, he/she is able to fall back on the experience of the franchisor and the previously established customer base and recognized brand name. Thanks to these factors, over 90% of franchises experience success, compared to the 60% of completely new businesses that barely manage to survive the first two years.
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