If you’re looking to start a business, but aren’t sure about taking on all of the initial costs, then a franchise might be the right path for you! Franchising works similar to owning, but all of the hard decisions are made already. The parent company will help with selecting a location, decorating the space, and getting the word out through proven marketing techniques. From there, it’s entirely your baby. To help it grow, though, you should know about franchise development and all the basics of this business model.
This is the most popular type of franchising. It includes an entire business format when you buy in, so the start up and operation of the business is fairly simple. It comes with the brand name, specific store design, training manuals, brand standards, and more. Everything you need to run a successful branch of the company is provided. This works great for people who like coloring inside the lines, but if you’re someone who wants a little more freedom and creativity in your business, then this type of franchising might not be for you.
Franchisor and Franchisee
In this relationship, you’ll be the franchisee. The franchisor is the company you’re buying into to establish your business. The franchisor will help you with various needs and ensure you’re adhering to its brand standards and protecting its intellectual property. But nothing in life comes free. In most cases, you’ll be expected to pay a one-time franchise fee, and then continuing royalty fees as your business grows and is profitable. It’s kind of like paying the farmer for the eggs you gather because he owns the chickens. The initial fee can be tens of thousands of dollars, depending on what company you go with, so you’ll still want to have a sizable nest egg stashed away for your business.