Perhaps you want to own your own business because you want to be your own boss. Should you start a business from scratch? Should you buy an existing business from owners who are seeking to sell so they can retire? Or, should you buy a franchise?
Think of franchising as paying someone for his or her business strategy, marketing strategy, operations strategy, and the use of his or her name. You are establishing a relationship with a successful business so you can use its systems and capitalize on its existing brand awareness in order to get a quicker return on your own investment. You are using its proven system and name and running it by its rules.
The biggest advantage of franchising appears to be the reduction of risk you will be taking for your investment. This is because franchises typically get up and running faster, and are profitable more quickly. This can be a result of better management as well as a well-known name. You also usually get better deals on supplies because the franchise company can purchase goods and supplies in bulk for the entire chain, and then pass that savings on to you and the other franchise units.
There are two groups involved in a franchise, the franchisor (the person or company leasing the rights to the business name and system) and the franchisee (the person who purchases it). The right to the franchise is sold by the franchisor to the franchisee for an initial sum of money, often called the up-front entry fee, or franchise fee. This money will be paid once the contract has been signed. The contract (franchise agreement) details the responsibilities of both the franchisor and the franchisee, and is usually for a specific length of time (typically several years). Once the contract expires, it must be renewed. State laws often have an impact on the options for this renewal.
After you sign the contract, franchisors often offer franchisees significant training. Once you've completed training and are ready to go, the franchisor will offer you a location they've already developed. Typically, the exterior of the building will be complete, but you will have to take care of interior additions such as kitchen equipment, seating and landscaping.
You'll get constant support from a field Consultant, who can advise you on details and will visit regularly. You'll also have to pay monthly fee as a precentage of your sales, and either a flat base rent or a percentage rent of as a percent of your sales.
How much money you make depends on many things, including the location and its popularity, the efficiency of your operating costs, and your ability to manage and control the business.