Deciding whether or not to go into business is a very important step in the business start-up process for new and potential small business owners. Each year, thousands of entrepreneurs and potential entrepreneurs are faced with this difficult decision. Because of the risk and the amount of work involved in starting a new business, many new and potential small business owners choose franchising as an alternative to starting a new, independent business.
Although the success rate for franchise-owned businesses is significantly better than the success rate for many independent businesses, there is no formula to guarantee success. One of the biggest mistakes you can make is to be in a hurry to get into business. That's why it's important to understand your reasons for going into business, and to determine if owning a business is right for you. If you are concerned about the risk involved in a new, independent business venture, then franchising may be the best business option for you.
Remember, however, that hard work, dedication and sacrifice are key elements in the success of any business venture, including franchising.
2. What is Franchising?
A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name or advertising symbol and an individual or group seeking the right to use that identification in a business. The franchise governs the method of conducting business between the two parties. Generally, a franchisee sells goods or services supplied by the franchisor or sells goods or services that meet the franchisor's quality standards.
Franchising is based on mutual trust between the franchisor and franchisee. The franchisor provides the business expertise (i.e., marketing plans, management guidance, financing assistance, site location, training, etc.) that otherwise would not be available to the franchisee. The franchisee brings to the...