Franchising 101

Need a refresher course in franchising? Here are a few of the basics:

What is Franchising?

Franchising is a method of distributing products or services. At least two levels of people are involved in a franchise system: (1) the franchisor, who lends his trademark or trade name and a business system; and (2) the franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor's name and system. Technically, the contract binding the two parties is the “franchise,” but that term is often used to mean the actual business that the franchisee operates.

What does Franchising Offer?

Franchise systems continue to provide the widest possible entrepreneurial opportunities for everyone. They also provide expanding opportunities and strong growth possibilities for minorities, women, veterans, and the handicapped. Franchised businesses are rapidly adding jobs to a broad range of industries. In addition, franchise companies are major contributors in the development of management and technical skills that are vital in the creation of an experienced work force, which is so important in building and strengthening both American and foreign economies.

What are the Benefits of Franchising?

The mutually beneficial relationship that exists between franchisors and franchisees makes franchising unique in the world of business. It provides entrepreneurs with an affordable means of accelerating expansion and achieving development goals more quickly than might otherwise be the case, and with far less risk. Similarly, franchisees have a head start because of the support provided by the franchise system.

What can Franchising do for You?

Franchising means being in business for yourself, but not by yourself. Whether it's accounting and financing, advertising and public relations, personnel management, purchasing, or inventory control, franchisors are there to provide “hands on,” one-to-one assistance. While franchising does provide opportunities, it does not create miracles. Franchisees combine knowledge and resources with entrepreneurial drive and spirit to form a business relationship unique to franchising. Franchising is a field of expanding economic opportunity in which each and every person can play a part based on talent, initiative, and dedication.

You can find this information and much more on the International Franchise Association website: http://www.franchise.org/.