Franchising 101: How Franchises Work

Franchising is one of the biggest industries in the United States – there are nearly 750,000 franchises across the country. Learn how to become part of the franchising industry with our Franchising 101 guide.

The Franchisee/Franchisor Relationship

The relationship between the franchisee and franchisor is vital to the success your business. Both the franchisee and franchisor are equally important.

• Franchisor: This is the company or brand that creates the initial concept/business and then develops an outline for other entrepreneurs to follow – under explicit permission of the franchisor. Each individual business opened after the original must adhere to any brand standards set by the franchisor, including name and trademark.
• Franchisee: The entrepreneur looking to open a business with a proven model, name recognition, along with training and support from the franchisor.

When searching for a franchise, you’ll want to find a franchisor whose values align with yours. Understand the brands mission and purpose and determine if you as an entrepreneur have the same goals.

Contract Terms and Types

Know that the agreement you sign with the franchisor could be as long as 20 years. Be sure to review the document carefully before signing and understand your options if you decide that franchising isn’t for you.

The franchise model is scalable, so there are multiple agreement options:

• Single-Unit: signing an agreement to open one location
• Multi-Unit: signing an agreement to open more than one location. A lot of times the agreement will also list a development timeline for the units to open.
• Master Franchisee: signing an agreement to buy the rights to an entire territory or region. Master Franchisees have the requirement to recruit other franchisees to join their region under them.

Having your future goals clearly defined before starting the franchise selection process, will help guide you when negotiating your agreement. With Franocity, we assist you with determining your goals during our free consultation process.

Independent Business Ownership

Joining a franchise does not replace business savvy and hard work. Owning a franchise location will give you the benefits of business ownership while not having to start from scratch. For a fee, you operate your business with a proven business model, brand recognition and reputation. However, the success of the business is ultimately up to you as the owner.

Like any business, there is always an investment risk, but franchisors provide education, training, and support to franchisees to ensure their growth. Aligning with a recognizable brand and utilizing the marketing potential can reap a profitable venture. As leaders of the franchise consultation industry, we can present well-suited opportunities to you to help you find the best franchise business model.

For a free consultation, contact us.