Franchise my Business- A Background

When considering starting a franchise business, you may wonder whether the decision is right for you. Although franchising can be an easy way to enter the world of business, it is not for everyone. Some fiercely independent entrepreneurs may balk at the franchise’s requirements and specifications. While many franchise systems are well-established and have been in business for decades, others may not be as successful as they claim. While many franchises offer strong training and support, others may fall short. Additionally, franchise agreements can restrict your ability to be creative and to create new ideas. Unless you are an entrepreneur with a lot of business acumen, franchises may not be a good choice. the original source
The idea of franchising dates back to the Middle Ages. Back then, landowners made franchise-like agreements with tax collectors, who would retain a portion of the money collected and turn over the rest to franchisees. The concept spread to other endeavors as well, including the production and distribution of sewing machines. Louis K. Liggett, the father of modern franchising, invited a group of druggists to form a “drug cooperative” in 1902. He explained to the druggists that he would sell their own private label products for a profit. By the end of the century, 40 druggists had pooled together $4,000 to form a business that would become a franchisor and brand.
In a franchise business, the franchisor pays the franchisor a fee for the use of its brand name. In return, the franchisee manages the business under the brand’s rules and regulations, while reaping the benefits of owning the brand and operating your own business. In some cases, franchisees pay for the rights to a particular brand and keep the profits, which makes franchising a great choice for many people.
The benefits of a franchise business are many. It’s possible to expand your business quickly with franchised units, and many of the capital requirements are borne by the franchisee. The Flynn Restaurant Group, for example, started out with a single Burger King franchise location and has grown to include more than 800 locations. Franchises are often considered a great investment because they eliminate the risk of starting a business from scratch. In addition, franchises provide business owners with the opportunity to earn additional income from their business without the hassles and risk of starting a new business.
Before deciding on a franchise, consider the financial and marketing costs. While starting a franchise business can be profitable, it can take several months to reach breakeven and some never break even. Before investing in a franchise, determine how much you can afford to spend on operating expenses and personal living. Consider consulting an accountant to calculate the costs you will incur. Some franchisors are more profitable than others, so it’s a good idea to shop around and find a better fit for your needs.
A franchising business model involves a long-term relationship between the franchisor and franchisee. This relationship can last a decade or longer. It is critical that both parties adhere to contractual obligations and work together to succeed. Franchises also help to build a stronger brand. Therefore, there are many benefits of franchising. There are two major advantages to this business model. The first is that it allows you to save money. Secondly, franchises can leverage volume discounts from suppliers. Franchising gives you a competitive edge over independently-operated businesses.