What To Know Before Purchasing A Franchise
Many entrepreneurs opt to launch a franchise when starting a new business, as opposed to starting completely from scratch. There are many advantages to launching a startup that is part of a franchise, but you still need to fully understand your commitment as a franchise partner. Below are some things you should keep in mind before purchasing a franchise.
What Is A Franchise?
A franchise is a licensing agreement that allows an independent party to market or sell the products and services of a pre-existing business, to open a business under the primary franchise name, and to use trademarks associated with the franchisee. In order to franchise a business, a new partner must purchase the rights to the franchise, agree to contractual obligations, and pay franchise fees for the sales they generate. Additionally, a franchise partner must agree to the terms and conditions regarding the quality of services they provide as a franchise partner in order to ensure they uphold the integrity of the brand they have bought into.
What Types Of Businesses Are Popular Franchises?
There are a wide variety of businesses that are available for franchise. The most popular businesses are restaurants, such as Subway, Dunkin Donuts, and KFC. Hotel chains, like Super 8 Motels or the Days Inn, are another popular franchise. However, businesses such as UPS, 7-Eleven, caregiving agencies, or Curves gym for women are other popular franchise options.
What Are The Benefits Of A Franchise?
Not only will your business open with automatic brand recognition, but as a franchise owner, you will benefit from the nationwide marketing campaigns run by your franchisee. In most cases you will not have to worry about sourcing new products, as the franchisee will designate the products and services made available by their brand. You also have a built-in support system from your franchise headquarters, and many franchise partners join together as a district or region to help support each other’s common goals. As a franchise partner, you may be required to open a minimum number of locations in a designated area, or you may be able to open in any cities or territories that have yet to be franchised.
What Are The Drawbacks Of Buying A Franchise?
While you initially open with instant brand recognition, making it easier for you to get your brand in the public’s eye, as a franchise partner you are required to pay a designated amount of your earnings to the franchisee. Having to give up a substantial amount of your startup earnings can make it even more challenging to make money in your first few years in business.
Another drawback to being a franchise partner is that you must work within the contractual guidelines of your franchise partner. This means you have little to no say in the direction in which your business is going. While you will have the freedom and flexibility of running your day-to-day operations, they must be run in a manner that supports the brand, or you may be subject to large penalties.
Opening a franchise can be a lucrative entrepreneurial move, but is important that you do your homework and clearly understand the relationship you and the franchisee will have as partners. Prior to committing to opening your own franchise, speak with other franchise partners in order to ensure you understand precisely what you are getting into.
This article was provided by Mike Gordon, young entrepreneur and small business owner. If you’re looking for a great opportunity to get involved with a cleaning service franchise, Mike recommends you visit http://anagovirginiabeach.com/franchise-opportunities-virginia-beach.html.