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If you’re a business owner looking to broaden your horizons by franchising your company, this is an exciting next step in your career. Before you take the plunge, you need to gather some important information. Below, we’ve compiled some of the most common questions about franchising as well as the answers to help guide you on your journey.
What Is a Franchise?
A franchise is a form of business license that gives franchisee access to a franchisor’s proprietary business knowledge, trademarks, and processes. As a result, the franchisee is then allowed to sell a product or service under the franchisor’s business name.
In essence, a franchise is a joint business venture between the franchisor and the franchisee. The franchisor represents the original business and they sell the right to use their business name and idea to the franchisee.
What Are Some of the Most Common Franchising Industries?
According to the International Franchise Association, franchises exist in almost every sector of business you can think of. They are most prominent, however, in the following industries:
- Hotels
- Restaurants
- Home repairs and remodeling
- Household furnishings
- Accounting
- Business consulting
- Hair salons
- Health aids and services
- Retail (i.e. clothing stores)
- Education
How Much Does It Cost to Purchase a Franchise?
The answer to this question will vary depending on the industry you plan to operate within, the way the business functions, and the size of the business. For example, you’ll likely need a lot more start-up money to buy a luxury hotel than to buy a small family-style restaurant. It will also depend on whether or not you’ll need to own or lease real estate to operate the franchise. Depending on these factors, total start-up expenses can range from $20,000 up to $1 million.
Is Franchising Right for Me?
Only you can decide if franchising is the right move for you. To facilitate this choice, try asking yourself some of these questions (and be brutally honest in your answers):
- Am I willing to take on the responsibilities of managing my own business?
- Can I afford this?
- Do I thoroughly understand the franchising process and am I willing to follow it?
- Have I previously owned or managed any of my own businesses?
- Do I have a support system in place?
By going through these queries, you’ll gain a better sense of your comfort level and your capacity to successfully run a franchise.
How Can I Start a Franchise?
If you already own a business and you’ve decided it’s time to expand by franchising, you need to first determine how to start a franchise.
Start by deciding which franchise industry is right for you. Do you see yourself working in health and fitness? Beauty? Education? Go through your options and narrow it down based on your interests and experience.
Contact a franchisor to see about buying a franchise from them. Next, you’ll need to make sure you’ve got the correct funding and documentation to move forward and finalize the process.
Buying or starting a franchise can be an incredibly fruitful endeavor. However, it’s important to have a strong knowledge base before you take the leap. By reading this guide, you’ve taken an excellent first step in fortifying your knowledge and getting started on the right foot.
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