Question: What is a franchise?
Answer: In business, a franchise is the right given to another to sell, market products, or provide services, using a proven method of operation, for a specified fee or a share of the profits that are generated by the franchise.
The franchiser, the company that owns the brand name or product line, provides the franchisee, the individual who purchases the rights to the franchise, with the company name and logo, the product, the advertising, and the necessary training to operate the business.
Question: What are some of the advantages of buying a franchise as opposed to starting a business from scratch?
Answer: A franchise should already have a proven tract record as far as name recognition is concerned, a proven line of products and or services, and a parent company that provides training and support.
Question: Because a company has a franchise name, does it make it a good place to do business?
Answer: In most cases, it does. But there will always be instances where a customer is not satisfied with a product or the services provided, no matter who provides them.
All franchisers have a vested interest in making sure that the franchisee is capable of providing excellent products and services at all times.
They want customers to feel comfortable with their name brand so they send inspectors and trainers out on a regular basic to inspect the franchisee's business and to make sure that the business is run in accordance with their strict rules and regulations.
Question: How can I be sure that buying a franchise is what is best for me?
Answer: You can never be absolutely sure of anything when it has to do with operating a business. You have to make decisions based on your own careful research and planning.
As with buying any business, enlist the aid of an experienced business attorney.
Look at all aspects of the business. Talk to other franchise operators. Ask serious questions. Check out the proposed location to see if there will be enough foot or car traffic to support the business.
Research more than one franchise. Look at the level of assistance that the franchiser is willing to provide and above all, make sure that the parent company is stable financially.
Question: What are some of the most common franchise names?
Answer: Some of the most famous fast food restaurant franchise names are MacDonald's, Burger King, Carl's, Jr., Jack In The Box, StarBucks Coffee, Taco Bell, Kentucky Fried Chicken, Churches Chicken, Krispy Kreme and Dunkin Donuts.
Automobile companies such as Ford Motors, Chevrolet, General Motors, Toyota, Mercedes Benz, Honda, Volks Wagon, Daimler Chrysler, and Nissan sell franchises all over the world.
Oil and gas companies, Exxon, Mobil, Arco, Chevron, Shell, British Petroleum, and Standard Oil are all well know franchise names.
Real estate companies are also big on franchises. Coldwell Banker, ReMax, Century 21, Prudential, Keller Williams, Red Carpet, ERA, GMAC, and Realty World, just to name a few.
Insurance companies have franchises all over the country. State Farm, Farmers, Mercury, AIS, Allstate, AAA, and many more.
Question: The company names listed above are well known but buying a franchise from one of them is expensive. Is it wise to buy a franchise in a lesser known company?
Answer: Whether it is wise or not would have to be determined by a lot of research on your part. There are many companies offering franchises and some of them will become household names.
But some of them may not do so great. You have to be cautious but ready. If you do your homework, you may find a franchise that may be up and coming and you may be able to get in on the ground floor at a very good price.
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