What is a Franchise?
A franchise is a business strategy and proven model. The franchise strategy is a mutually beneficial relationship for the franchisee and the franchisor. The franchisee is able to reduce the risk of business ownership by implementing a proven system and the franchisor is able to gain greater market share by expanding the brand. Franchising offers the franchisee the opportunity to take advantage of the collective efforts of the other franchisees and the franchisor.
Franchisees reap the benefits of the efforts and accomplishments of those who built the business model and strengthened the brand long before the public was offered an opportunity to participate in the franchise system. Often we see a business or invention that is flourishing and we wish we had been the creator of the product or system. With franchising you do not need to be the creator but you are able to take full advantage of the efforts of the pioneer.
In a franchise system you have the advantage of a brand, operating system and ongoing support for a specific time in a specific geographically defined territory. In a franchise system the franchisee is obligated to completely implement the franchisor’s operating system.
Franchising is regulated by the Federal Trade Commission (FTC.) The federal government and fourteen states have specific regulations on franchising. The franchisor is required to provide you a Uniform Franchise Offering Circular (UFOC) and a franchise agreement. These documents specifically detail the relationship between the franchisor and the franchisee. |
