What Is Franchising?

Franchising is a business structure which allows an independent business person, known as the “franchisee”, to participate in an already established business system. The Franchisee enters into an agreement contract with the owner of the established business who is known as the “franchisor”.

Benefits of Franchising

There are many advantages to buying a franchise, and this is especially true if your business experience is limited. Here is list of just some of the advantages of buying a franchise:

• Training and On-going Support – A comprehensive training program prepares you with everything you need to know in order to successfully run a business. You’ll also receive on-going support from a team of professionals.
• Financing – Banks are often more likely to lend money to buy a franchise than for a private business.
• Higher Profit and Quicker Start Up – The business system has already proven to be successful by the franchisor, and you are taking advantage of that “know-how” and experience.
• Help with Start Up and Beyond – In owning a franchise, you can take advantage of the “know how” and experience of the franchisor. In fact, even an inexperienced person with only a modest amount of capital can become a franchise owner. With the on-going support and training from the franchisor, now is the time for you to fulfill your dreams for independence.
• Lower Risk – When you buy a franchise, you are purchasing an established concept that has already been created. Statistics show that an individual starting a franchise stands a much better chance of succeeding than does an individual starting a private business. The U.S. Commerce Department estimates that 95% of franchises succeed when only 25 – 35% of independent businesses succeed.
• Exclusive Rights – With exclusive rights to a territory, the franchisor won’t sell any other franchises in the same area.
• Being Your Own Boss – Owning a franchise enables you to operate your own business, to create your own schedule, and to be your own boss.

The Popularity of Franchising

The U.S. Department of Commerce reports that revenues from franchising are approximately one trillion dollars a year. Franchising employs nearly 9 million people, includes over 800,000 establishments, and accounts for more than 40% of all retail sales. It is expected that franchise businesses will increase about 8% per year.