Opening a Franchise Business

One of the greatest decisions and largest risks of a person or organizations life is starting a business. The next big decision? Whether or not to go franchise. A franchise business is one which is basically a duplicate of a previous business. The business owner rents the franchise logo and way of running the business. Examples of franchise businesses include McDonald's, Pizza Hut, Taco Bell, etc. But what are the pros and cons of starting a franchise business, and what does the law say about the subject.

The pros of opening a franchise business are numerous. First of all, there is a lower risk of failure. This is often due to name recognition and the standard that is set by previous businesses. For example, most diners know what to expect when they go to McDonalds. Another pro of starting a franchise business is buying power. The collective buying power of franchise businesses is often enormous, creating an easy way for business owners to save money.

Still, there are cons to buying a franchise. On the on hand, the startup cost for a franchise business is often much greater than starting other businesses. In addition to this, buying into a franchise leaves little room for deviating away from the standard. Subway subs, for example, are to only contain a certain weight of meat and cheese. Everything is standard and there are few ways of making your stand out from the typical.

So what does the law say about the process of buying into the franchise business? When you start searching for the right franchise for you, you need to be sure that the franchise is legitimate. This is especially true if the franchise is a small franchise, a new franchise or one that you have never heard of before. Franchise law varies from state to state so this is going to depend slightly on the state in which you live. One of the best pieces of advice for any new business owner is to locate an attorney that can help you sort through the issues.

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Facts on Franchising

Franchising involves an almost symbiotic relationship between the franchisee and the franchisor. The franchisee provides expansion, additional profit and increased brand recognition while the franchisor provides the basic know how, brand name, supply chain, and continuing support for the franchisee. To pay for this instant business, the franchisee shells out an up front fee or a franchise fee for the use of the business system and the brand name. Moreover, the franchisee has to pay a monthly or yearly percentage of the gross sales to the franchisor. Recouping the investment may indeed take some time but franchise companies will provide you an estimate roi or return of investments to give you an idea on this.

For this reason, franchising has become one of the most profitable and strongest business systems in the world today and though franchises represents about only a tenth of the total number of businesses, franchises garners almost a third of the market share.

There are many types of franchise agreements. These different types differ only on the amount of participation a franchisee can have in making business decisions, advertising and marketing. Some forms of franchising such as those in the food industry strictly regulates how the business is run while other types gives a fair amount of space to franchisees to run their businesses as they see fit.

As they say, franchising can be considered the business in a box selling. Franchisees get to buy a business that already has all the components needed to make it a success. The operations manual for example includes all the forms that will be used in the operation, how much to pay and when to pay your employees, how to market the product or service within the first few months, policies and procedures, compensation packages, product and service information and just about everything to the most minute detail needed to run the business. Prospect franchisees and their people also have to undergo several months of training and drilling to prepare them in handling the store. This results in a uniform and consistent service that gives customers the confidence of knowing what to expect.

So if you are thinking on going into this business, how do you start? It is generally suggested that a franchisee should have at least a basic knowledge and interest in the business he will be going into because although he or she can hire someone competent to handle the store, the franchisor's time will always be needed especially on the start up months.

You also have to learn how to evaluate the strength of a franchise offer. Are the upfront fee and monthly royalties well worth the cost of the brand name, the support system and the business system given to you? Talking to other franchisees in the system might help you get a general idea on this. Asking them of the amount of support they get from the franchisor, the amount of business the brand name generates and the effectiveness of the business system to deal with day to day as well as long term hurdles will give you a clearer picture if the franchise is worth it.

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Should You Start a Franchise?

In this down economy, are you thinking of starting a new business? Have you thought about what type of business you want to start? Let's talk about a few things that can help you with this decision.

One of the hardest things about starting a new business is getting it off the ground and setting it up for long term sustainability. We've all heard the statistics that say that 80% of businesses fail in the first couple of years. While these numbers fluctuate depending on who your source is and what the industry is, the general feeling is that most new businesses fail.

There are several reasons for these failures. One is that companies run out of capital. Another big one is that they don't get enough exposure and just die off. In other words sometimes it's a marketing problem. But either way, the fact is that a good number of new businesses fail for one reason or another.

So if the numbers are so bad over time, what can you do to improve your chances of surviving?
Well, one option very effective option is to start a franchise. Why is this a better way to go? Well, when you start a franchise you get the training and backing of a company that knows what they're doing in their industry. If they have a good track record you can trust that by getting started with that franchise you'll have a better chance of success.

The other benefit of starting your new business from a franchise is that you get instant brand recognition. Think of it this way: you could start your own burger shop and have to build up recognition, or you could get a well-known name immediately like McDonald's, Burger King, etc. and also get all of the advertising that goes with it.

The other good thing is that there are franchises in almost every industry. You could start a cartridge franchise, bread franchise, food franchise, or just about anything else you can think of.
So you have a few choices to make. You can either try to make it all on your own, or you can go to a system that is proven. Granted, one of these options costs a lot more in the beginning, but in the long run you're more likely to succeed with the franchise option.

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Philippine Franchise Business, a Good Ground of Investment

Franchising nowadays especially in the Philippines is a booming investment. The government actively integrates its overseas Filipino workers, budding entrepreneurs and small businessmen to get into the franchising bandwagon. There's also an association of Filipino franchisers to help those who wants to venture in this kind of pursuit.

As most people know, Filipinos love to eat hence they lean on investments concentrating on food. One example is the food kiosk or cart business. There's the kiosk of dumplings, ice scrambles, burger, shawarma, pork buns, nachos and fruit shakes to name a few. At a minimum investment of around $500, you're now part of the Philippine franchise business.
For those with real money to invest, think about fast food businesses. A very successful franchise is Jollibee. It's like McDonalds but with a Filipino take on food. They say that anywhere you put Jollibee, it will be a sure fire hit. They've branched out in Asia as well as in the US too.

Homegrown businesses are Binalot (rice meals in banana leaves), Lots a Pizza, Red Ribbon, Goldilocks, Ministop (Philippine's version of 7-Eleven) and Waffletime. They are growing very fast every year and it will not be a surprise if they penetrate other countries as well.
Aside from food, people tend to take a look also on water refilling stations. These businesses are like mushrooms popping out everywhere. I really mean everywhere. As water is a basic need, they tapped into this resource and make a business out of it.

Training schools or those related to education are good franchise investments too. It is not some fad like other business since people have this constant hunger for learning. Since this is a service business, I would like to emphasize that its success does not depend entirely on how much money you can invest but the quality of instructors/teachers and the modules that you offer to students.

Pharmacy business joins also in the world of franchise. Mercury Drug Store is the most famous with a network of more than 700 stores in the country. Another most promising store right now is the Generics Pharmacy which boasts of best franchising support.
Lastly, franchises that concentrate on personal care are very successful in this country. Nothing beats like those that cater to women's beauty needs as well as those of men. Notable celebrities endorse salons, spas and saunas thus creating a buzz. Eventually their fans succumb to celebrity wagon and the business gets the final credit.

All in all, whatever business you choose, dedication and hardwork is very important. Nurture and cherish it. So once you don't longer enjoy it, you can sell it at a great sum because you've taken care of from the start.

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What is a Franchise? Can Anyone Start a Franchise?

Franchising is when someone uses another person's idea or business formula to start their own business.

The person selling the franchise namely the franchisor grants the independent operator namely the franchisee to copy and distribute its products and use its trademarks and name in return for a percentage or royalty payment of the gross monthly /yearly sales. In most cases the franchisee will also have to pay an upfront one time franchise fee also to the franchisor. The franchisee must then follow certain guidelines already set up by the franchisor.

The history of franchising began in the 1850's when Isaac Singer began a franchise in order to distribute his sewing machines outside of his geographical area. He began by selling licenses to entrepreneurs in different parts of the country.

In 1955 Ray Croc took over a small chain of food franchise and built it up into the most successful fast food franchise in the world namely McDonald's.

Other modern day examples of successful franchises are Subway, Domino Pizza, KFC and Pizza Hut. There are currently 120 different franchises worldwide which include automotive, cleaning and maintenance, health and fitness and financial services franchises. According to Franchise Associations over 4% of all businesses are franchises.

Franchise products very often entail the franchisor providing advertising, marketing, training and even business loans as well as offering other support services. Franchise contracts normally last between five and thirty years.

Franchising is available to anyone and is particularly popular because it offers people the opportunity to buy into a brand and a business model that is already established and very well known. Today franchising is helping thousands of individuals to be their own boss and to operate their own business. There is also more likelihood of starting a successful business when a proven business formula is already in place. It is claimed that franchising has helped the economy grow in over 80 countries and generates over $4 trillion in sales.

However as with any business there are disadvantages to a franchise business. The main one being that it can be very costly to set the business up especially when having to purchase premises and having to employ staff. There is also the expense of having to pay royalties from any profits. Often the need to find the initial payment for the franchise opportunity can also delay starting up your own business.

There are however other businesses that can be started which are similar to the franchise business concept but without the disadvantages. There are many other business opportunities that too offer an established business system that can be set up straight away but without the need to pay any franchise set up costs or royalties. These opportunities offer the opportunity to set up a business working from home hence saving having to outlay vast amounts of money to buy premises. 

They can very often be set up with the simple requirements being to own a computer and have a phone line especially with the many internet home based business opportunities that are now available. These companies again offer the security of training and a proven business system to set up that is already successful. You can therefore set up your home based business straight away. Another advantage in this type of business is that you are not compelled to follow any set guidelines as you would be as a franchisee.

Indeed anyone can start a business but it is advisable before considering buying a franchise business to carry out a thorough research of the company and its products and to check details of how much cost is involved to be part of its franchise. It is also prudent to check out other business opportunities which also offer the same advantages that a franchise offers namely training, a one to one support network and a proven successful business system but without the large financial set up costs and royalty payments that can result in delaying setting up your business and reduce your profits. After all if you are going to take that all important step to become you own boss and start your own business it's important to ensure that you make the maximum profit for yourself to secure your ongoing success and prosperity.

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