Franchising 101

 

• What is Franchising

• Franchising vs. Businesses

• A History of Franchising

• The Process of Selecting your Franchising

• Why Franchisees Fail

What is franchising?

Webster’s Dictionary lists a franchise as “the right or license granted to an individual or group to market a company’s goods or services in a particular territory.” Simply stated, franchising is a business growth strategy that provides products and services to customers. You cannot purchase or buy a franchise. You acquire a “license” to operate the business, just as you acquire a driver’s license in order to operate your vehicle. As in driving, a franchisee must abide by certain guidelines established by the franchisor. As a part of doing business you may be required to “buy” equipment and inventory in order to operate the business successfully.

Franchising vs. Independent Businesses

You may have wanted to start a business of your own for some time. While franchising will not eliminate all of the stress associated with starting a business, it can reduce it and save you time and money. As an example, let’s select one business category … automotive service and repair. Which has more value, a Meineke franchise or an independent garage? If you opened an independent garage, how many and what type spark plugs would you purchase? A franchisor will not only tell you what your initial inventory should be, it will provide what your inventory levels should be maintained in order to properly service cars in your market. Franchisors provide:

• Immediate name recognition
• Proven operating systems
• Operations and training support for you and your employees
• Inventory management of parts and supplies
• Marketing support
• Point-of-sale management systems
• Real estate assistance
• And much more.

A franchisor provides the blueprint and tools to develop a business. You provide the hard work. With a franchise, you are in business for yourself but not by yourself. You also have the camaraderie of other franchisees who, like you, have invested in the same business. You share common goals and values.

One of the most important aspects of acquiring any business is to determine an exit strategy for the time when you will leave the business. After you have developed a franchise and transferred the business to a new owner, the franchisor will continue to provide support and assistance to the new owner.