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What Is a Franchise Business?

April 26, 2018
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Picture of Writing on a Wall What is a Franchise Business?
What is a franchise business? Let's first take a look at what a franchise business isn't. A franchise business isn't a get-rich-quick scheme. A franchise business isn't a guaranteed road to success. A franchise business isn't the lazy man's way to make a living. These are just a few of the misconceptions hopeful entrepreneurs might have about buying into a franchise opportunity. Before we go on, however, understand that owning a franchise can lead to wealth, it can allow you to be your own boss, and it can give you the freedom to enjoy life. None of those things will come without determination, hard work, and some good old-fashioned start-up money. The bottom line: A franchise business isn't for everybody, but if you're willing to take the time to find a franchise that's right for you, you can build a successful future.

What Is a Franchise Business?

A franchise business is a business you own and operate using an established company's brand. You, the franchisee, license the rights to operate using that company's brand and trademarks, operating procedures, and products. The company granting you the rights is the franchisor. Essentially, buying into a franchise means you will have the brand name recognition, market-ready products, and the resources of the company you are buying a franchise from. The right to do business under an already-established brand isn't free. There is always an initial purchase cost up front as well as ongoing fees for the continued right to license a company's trademarks, products, and operating procedures.

Picture of a Work Table About a Franchise Business

There are three main ways you, as an entrepreneur, can own a business. You can open your own business and build it from the ground up, you can buy an already-established business, or you can buy into a franchise. There are advantages and disadvantages that go along with each of these options. In many cases, buying a franchise business is the best way to go, but there are some considerations before you take the plunge.

What is a Franchise Business Compared to a New Business?

Picture of a Businessman Looking at a Franchise Business vs a New Business
Starting your own business offers the advantage of true ownership. If you get into a franchise, you are licensing the rights to use a company's brand, operating procedures, and products, which means you will be expected to run your business in accordance with that company's standards and business practices. If those aren't line with your business model, then you might be better off starting your own business. Starting your own business allows you to make the rules, but it also means you won't have the resources of a large company backing you, you won't have immediate brand recognition, and all success or failure is completely on you. With a franchise, you've already got a head start.

What is a Franchise Business Compared to an Existing Business?

Picture of a Businessman Walking Between a Franchise Business and an Existing Business
Buying an existing business, if it is already showing a margin of success, might be a better option than trying to establish a new business, but it still might not be as successful as buying into a franchise. If you buy a business that's already up and running, you have the advantage of an existing clientele and a business that's already operational, but you still don't have the support of a large corporation behind you. The success or failure of the business is still in your hands. With a franchise, you get the brand recognition, the resources, the training, the marketing, and the ongoing product development that goes along with buying into a well-known franchise. Buying an existing business may have a slight edge over starting from scratch, but buying into a franchise can be even more rewarding, at least in the short term.

Franchise Business

What is a franchise business? A franchise business is an opportunity to get into business for yourself without the need to establish your brand. The best reason to buy a franchise is brand recognition. In the world of business, brand is everything. If you buy into a franchise with a great reputation, high profile recognition by consumers, and a high level of consumer trust, you'll already be on the road to a successful business venture. There are no guarantees, but when you have a brand name on your side that's recognized by consumers as a quality brand, you'll have a better than average chance of making your franchise pay off.

Picture of Recognized Franchise Business Brands

Another advantage to owning a franchise is the resources you'll have available to you through the franchisor. You will be able to purchase products directly from the franchisor, you'll have access to resources and training that can help you run your business better, and you'll even be able to benefit from advertising the company does on behalf of its brand. In addition to those perks, you'll have an established operating procedure, new product development, and marketing efforts that can greatly increase your success rate. According to an Entrepreneur staff article on franchising, "Reputable franchisors conduct market research before selling a new outlet . . ." This means you can be confident there's a market for the products or services of the franchise you're buying. This decreases the risk of opening a business that fails due to lack of consumer interest.

Franchise ownership does have its disadvantages. One of the biggest disadvantages to owning a franchise is the sometimes-limited freedom you'll have. While you may be licensing the right to use company trademarks from the franchisor, you won't have the right to do anything you want with the brand. The franchisor will expect you to adhere to a set of guidelines to ensure you don't give the brand a bad name. If you are an entrepreneur who wants to experiment with different marketing ideas, you'll have to follow company policy regarding advertising. This could limit your options. When you buy into a franchise, the face of the company becomes your face. Every move you make is a reflection on the brand, and likewise, every move the company makes becomes a reflection on you. If you're the creative type and like to try new things, remember, you will likely be restricted to advertising and marketing that is in line with the views of the franchisor. You'll also be restricted to selling branded products in association with your franchise.

So, what is a franchise business? It's an opportunity for you to get into business for yourself with the backing of an established brand. If you want to get into business without the hassles associated with building a business from the ground up, buying a franchise business is a great way to do it. Key advantages include:
  • Less risk
  • Turnkey
  • Buying power
  • New product development
  • Continual training
  • Brand recognition
  • Standard operating procedures
  • Marketing power

How to Find the Right Franchise Business for You

Picture of a Businessman Looking for a Franchise Business
Now that you've answered the question, what is a franchise business, you're ready to ask how to find the right franchise business for you. The best place to start your search for the perfect franchise opportunity is All USA Franchises. All USA Franchises is a FREE franchise directory whose mission is to have all 3,000+ franchises in the United States listed in one place, making it easy and convenient for you to find the franchise opportunity that works best for you. This ensures you, as an entrepreneur or potential investor, have the best chance of finding the perfect opportunity for you based on your lifestyle, your budget, and your life's passion. No other franchise directory provides the largest selection of franchises like All USA Franchises.

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