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Franchising

Also read: Choosing a Name | Start Up Costs | Business Structure

Some businesses find that they benefit from allowing other business to trade under their name or trade mark. If you think that starting a brand new business is just far too risky for you then you could always consider becoming a Franchisee.

A Business Franchise

Often successful businesses are looking for outlets in specified areas, to help their own business grow. It can be a fast way of getting your own business up and running. You should check to see if there are any existing successful franchises of the company and if there are any failing ones too. Of course lenders are always more willing to lend you money to set up a franchise of an already successful business.

You should consider if there is a market in your area for the franchise you are about to enter into. Know who your competitors are going to be. Take legal advice before your sign any contract and don’t be rushed into doing so. It always helps to draw up a business plan before you start your venture.

A successful business, one that is already tried, tested and approved could be looking for opportunities to grow; they would be known as the Franchisor. The franchisor will grant a license to another business known as the Franchisee to allow them to sell the franchisors products or services. The franchisor will help and give support to the franchisee as it is also in their interest for the franchisees business to succeed.

You should remember however that while the franchisee will be the owner of the outlet it is running from, it is still the franchisor that has the say as to how their products are sold and marketed.

A Franchisee will be asked for a fee for this privilege and of course a percentage of royalties on any sales will have to be paid to the franchisor.

When it comes to selling your franchise the franchisor will almost certainly want to have some say in to whom you sell it to. Profits may not be as high as you wish because of such things as royalties that you pay your franchisor.