Franchising.

Simply, a franchise business is a method a company uses to distribute its products or services through retail outlets owned by independent, third party operators. The independent operator does business using the marketing methods, trademarked goods and services and the "goodwill" and name recognition developed by the company. In exchange, the independent operator pays an initial fee and royalties to the owner of the franchise.

The company that grants the independent operator the right to distribute its trademarks, products, or techniques is known as the franchiser. The independent, third party business person distributing the franchiser's products or services through retail or service outlets is called the franchisee.

Franchised businesses have made major contributions to the economy, including generating more jobs between 2001 and 2005 than several
of the nation’s major economic sectors. In 2005, American franchises:

• Operated 909,253 establishments
• Provided 11 million jobs -- more than 8% of private sector employment
• Contributed $278.6 billion in payroll

QUESTIONS TO ASK YOURSELF BEFORE YOU BUY

1. How much money do I have available to spend, and can I afford the financial risk of buying a franchised business?
2. How much money will it take to fully fund the purchase of a franchised business, including start up costs and working capital for your first year in business?
3. How can I find and qualify for financial funding?
4. What kind of support is really provided from the franchisor?
5. Do I have the requisite business skills to qualify me for an investment of this nature?
6. Consider a Personality Profile Assessment to assist you in assessing your business and personal interests, skills, strengths and weaknesses.
7. If my franchised business fails, what are my rights and what are the consequences for my long-term financial health?
8. Does my franchisor collectively bargain with its franchisees, and what is my franchisor's reputation for fairness and support for its franchise system?

Answers To The 19 Most Commonly Asked Questions About Franchising
Ads for Business Opportunities: How To Detect Deception
Center for Total Quality Franchising


WHAT SHOULD I CONSIDER BEFORE BUYING A FRANCHISE?

• The type of experience required in the franchised business;
• A complete understanding of the business;
• The hours and personal commitment necessary to run the business;
• Who the franchisor is, what its track record has been, and the business experience of its officers and directors;
• How other franchisees in the same system are doing;
• How much it's going to cost to get into the franchise;
• How much you're going to pay for the continuing right to operate the business;
• If there are any products or services you must buy from the franchisor and how and by whom they are supplied;
• The terms and conditions under which the franchise relationship can be terminated or renewed, and how many franchisees have left the system during the past few years;
• The financial condition of the franchisor and its system.