What is a franchise?
Introduction
Franchising is a business model in which the owners (franchisees) of a company sell or licence their business concept and trademark to another individual or group of individuals (franchisors). In return, the franchisor gives the franchisee essential products, services and/or non-material assistance in order for them to open and operate their own branch of the original business. In exchange for a management or royalty fee.
The franchisee pays the franchisor a fee for this right and receives support from him/her in operating the business.
- The franchisee usually has to pay an initial fee for establishing his own business under the banner of his franchisor's brand name and logo. In addition,
- They must also pay ongoing royalties or management fees as well as fees for advertising campaigns launched by the parent company.
A franchise also involves training and support from the franchisor, which can include advertising and promotion assistance as well as business planning and management training.
The benefits of a franchise are many. You'll be able to draw on your franchisor's expertise to help build your business, whether you need guidance on how to run it or want advice on how best to market yourself.
The franchise system originated with companies like Coca-Cola, Burger King and McDonald's and some of their early franchisees were entrepreneurs looking to open new restaurants. Franchisees pay an initial fee for the right to use the brand name and follow a set business model. In return, they receive training and support from headquarters, which helps them operate more efficiently than if they were independent businesses.
The first franchise was granted in 1921 by United Parcel Service (UPS), which marked an important milestone in American business history because it allowed small companies to grow quickly without requiring large amounts capital investment or extensive management experience on their part. The concept caught on quickly: today there are more than 2 million franchises worldwide generating £1 trillion annually in revenue
Today, there are different types of franchises, including those that offer consulting services and those that sell products such as books or clothing items. For example, a franchise could be a business that offers tax preparation services. The owner of the franchise would be responsible for marketing the business and hiring staff to help with tax preparation services.
Franchises can be an ideal way to start a business
When you buy a franchise, you're buying into a proven business system. As a franchisee, you have access to training and support from the franchisor that will help ensure your success. The brand name recognition of being associated with a well-known company can also be an advantage for attracting customers.
Franchises often offer their own marketing materials so that franchises can advertise themselves in their local area without having to pay for advertising space or time on radio or TV stations.
Conclusion
As you can see, franchises are a great way to get started in business. The franchise system has been around for over 100 years, but it continues to be an important part of our economy. This may be because they offer entrepreneurs a chance to start up their own business without having all the capital needed upfront by starting from scratch or buying an existing one.
