Thinking about leaving corporate America and striking out on your own? Becoming your own boss is an intoxicating thought and many consider it the American Dream.
There are two ways to become your own boss: Start a business from scratch or invest in a franchised business.
A business from scratch can be lucrative, but there is a lot of work involved. You need to develop a product or service, do all your own market research, map out marketing plans, work on any licenses you may need, and build your brand from scratch.
A franchise, however, makes the process easier. The brand is already known, training and support is provided, most research is done for you, and the history of franchising success is often better than when you begin from scratch.
However, while franchising can be a better path to success in many cases, it is important to know some of the basics about the process before you go further. So, here are some essential points you will need to know.
What Exactly Is a Franchise?
The best way to explain this is to use the definition given by the International Franchise Association (IFA):
A franchise (or franchising) is a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a 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 more commonly refers to the actual business that the franchisee operates. The practice of creating and distributing the brand and franchise system is most often referred to as franchising.
The Brand Is Owned by The Franchisor
The most crucial point to understand is that the Franchisor owns the brand. They have spent a lot of money and time developing that brand, and the processes, training and marketing that will go along with it. This is good because it ensures that your success means success for the Franchisor. In other words, they have your back!
You Have to Qualify
Because the Franchisor has their brand at stake, they want to make sure that every potential Franchisee is properly vetted. They need to know that you are financially stable and can pay the franchise fees involved, as well as support your business as you start to grow it. Fees can be as low as a couple thousand dollars, or up to $50,000 or more, depending on the franchised business you choose.
They also need to know that you are competent and can follow the processes they have set up. You will need to be able to follow the guidelines they have spent all that time developing.
Disclosure
This is important. The Franchisor must disclose to a potential Franchisee all the valuable information they need to know before making a final decision: financial information about the company, rates of success, total investment needed, and anything else they want you to know involving the operations of the business.
You will also have an opportunity to speak with other franchisees and discover their feelings about the company. This one-on-one can be a vital step in your decision-making process.
Help Is Available
The first step you should take is to contact a Franchise Consultant. They can help you through the entire process, from finding out if franchising is right for you to discovering the best franchised business. They will also take you through every step involved in the franchise process. And they do it at no cost to you!
Franchise Matchmakers is a team of franchising professionals that are dedicated to helping people explore business ownership as a career path. Contact them at info@franchisematchmakers.com to find out more about franchising options that are perfect for you.
