What Is A Franchise?

A franchise occurs when a business permits a person or group of people to market the business’ services and/or products in a specific place or area.  The franchisee in this equation is the individual or group of people and the business allowing the person or group to utilize the business’ trademark and name is referred to as the franchisor.  Many of the most widespread franchises across the globe today, (such as Pizza Hut and 7-11), originated in the United States but have since spread to other countries.  Franchise opportunities are available in a variety of markets including fast food, mini-mart, hotel, and service industry businesses.  A franchise can vary in cost greatly, from $3000 to $1 million or more.

The Perks of Being a Franchisor
When a company grants a franchise of their business model and the use of their trademarks, training, etc, they are paid a royalty fee and a percentage of the franchise’s gross monthly sales.  A franchisor also has the benefit of more locations, without the headache of having to personally manage each one.  The franchisees also often bring a fresh perspective into the business, which can help renew a franchisor’s conviction.

The Benefits of having a Franchise
A franchisee can also profit from a franchise opportunity.  Often investing in a franchise for sale is of lower risk for the franchisee than it was for the original franchisor when they started the business.  By the time a company is offered as a franchise, most of the kinks have already been worked out.  A franchisee also benefits from the franchise’s training and development programs and support desk.  Most franchises also run country or state wide marketing campaigns which can help increase the sales of locations within the area of those campaigns.  Franchisees often have an easy time finding financing because banks and other institutions are less skeptical of a business plan that has already worked in other locations.

Franchise Categories
A franchise for sale will usually fit into one of the following categories:

• Event Franchises – Conferences and other events that have proven successful are reproduced in other locations.
• Social Franchises – Medical services, hotels, and at-home businesses often fall into this category of franchises for sale.
• Business Format – Give the franchisee not only the right to utilize the trademark of the company, but the business model as well.
• Product Format – The franchisor, (a manufacturer for instance), allows the franchisee, (often a store owner), to distribute their products.
• Manufacturing Franchises – A franchisee is given the right to produce trademarked goods.
• Business Opportunity Ventures – A business owner buys and distributes the merchandise of a franchisor.

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