Franchising is a business model that allows a business owner (the franchisor) to grant the right to use their brand and method of doing business to another individual or group of individuals (the franchisee) in exchange for a franchise fee. The franchisee usually pays an initial start-up fee and annual licensing fees to the franchisor. Here are some key features of franchising:
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Brand: A franchisors brand is its most valuable asset, and consumers decide which business to shop at based on what they know about the brand.
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Systems and Support: Great franchisors provide systems, tools, and support so that their franchisees have the ability to live up to the systems brand standards and ensure customer satisfaction.
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Joint Venture: A franchise is a joint venture between a franchisor and a franchisee. The franchisor is the original business that sells the right to use its name and idea. The franchisee buys this right to sell the franchisors goods or services under an existing business model and trademark.
Franchising is a great way for companies to increase their distribution and expand their business without using all of their own money to grow their business. There are many types of franchises in an ever-growing range of industries, and its estimated that over 120 different industries use franchising. However, its important to choose a franchise opportunity wisely and do your due diligence before investing.
