Franchising, a viable business opportunity

In the past few decades, franchising has become the quickest way to grow businesses. Franchising is beneficial to both parties, the Franchisor as well as the Franchisee. The franchisor is able to retain the value associated with the Trademark and does not have to bear the cost of building and running a distribution system. The franchisee is able to obtain a successful business module and the benefits of an established business. With the wide range of franchises up for grabs, franchisees can choose franchises that are suitable to their personalities which is essential to fully integrate into the business module.

When a business model has proven itself, it is ripe for franchising. Businesses with branches eventually end up owning capital heavy distribution systems. Franchising the business offers opportunities of growth by reducing capital heavy chains. The Franchisee takes up part of the costs and owns part of the growing business without altering the trademark. The franchisors end up having less to lose, while gaining larger market access. Franchising helps with ad spend too. The ad spend for individual business may be small, but by franchising your business, individual franchisees pool in their ad spend and in turn get wider exposure.

By buying into a franchise, a franchisee is offered the setup of running a well-established brand. The Franchisor will provide all the support as mentioned in the Franchise agreement. The Franchisee is expected to run the business as per the franchisor’s standards. Merely buying into a franchise will not help. Those looking to invest in a franchise, must do their groundwork, as franchisor generally set the rules, though most are open to negotiation. Franchises that are over 10 years old are the safest bets as these franchisors have a sound business model that has worked over the years.

The Federal Trade Commission generally keeps oversight on all franchises through the FTC Franchise Rule. As per the FTC, the Franchisor is obliged to provide the franchisee with the Franchise Disclosure document two weeks prior to any monetary transaction. The Franchise Disclosure Document can be negotiated with the franchisor. Every state can alter the contents of the FDD as long as there are compliant with the rules that govern federal regulatory policy. With a wide array of franchises up for grabs, it is always good to look for those business that hold the same values as you do, thus ensuring you have a good time running your business.