Francising is A continuing relationship in which a franchisor provides a licensed privilege to the franchisee to do business and offers assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration. Franchising is a form of business by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers (franchisees).
Advantages of franchising, franchise offers many other advantages that aren't available to the entrepreneur starting a business from scratch. Perhaps the most significant is that you get a proven system of operation and training in how to use it. New franchisees can avoid a lot of the mistakes startup entrepreneurs typically make because the franchisor has already perfected daily operations through trial and error.
Reputable franchisors conduct market research before selling a new outlet, so you'll feel greater confidence that there's a demand for the product or service. The franchisor also provides you a clear picture of the competition and how to differentiate yourself from them. Finally, franchisees enjoy the benefit of strength in numbers. You'll gain from economics of scale in buying materials, supplies and services, such as advertising, as well as in negotiating for locations and lease terms. By comparison, independent operators have to negotiate on their own, usually getting less favorable terms. Some suppliers won't deal with new businesses or will reject your business because your account isn't big enough.
How to Franchise a business: Essentially, a franchisee pays an initial fee and ongoing royalties to a franchisor like 4 percent to 10 percent of sales on average--for continued support and training in advertising, marketing, sales, operational guidance, financial and human resources consulting, and other services.
; in return, the franchisee gains the use of a trademark, ongoing support from the franchisor, and the right...