Home Based Franchising Copyright © 2005 OwnABizToday.com
Is Home Based Franchising for you?
Do you desire Home Business Ownership but cringe at the thought
of starting from scratch?
Possibly a Home based Franchise is your answer.
A Franchise is a business in which "... the franchisor, the
owner and developer of the franchise system licenses [you]
franchisees to use trademarks, service marks, logos, or
advertising owned or developed by the franchisor."
(International Franchising Association, Franchising basics).
With some franchise programs, the business operates using the
Franchisor's brand name only.
Other programs are less restrictive and allow for the usage of
both a trade name in addition to the franchisor's brand name.
Common to all franchise programs, the franchisee[ you] is
responsible to pay the franchisor, advertising fees, initial
fees, service fees, and or royalty fees.
You are responsible for payment whether your business is
profitable or not.
Additionally, many franchisor's provide educational programs to
franchisees before the inception of the business.
Often times, they've done demographic studies and other studies
to ensure that you have greater odds of returning a profit.
Major Franchise Types
* Unit Franchising
Is the most simple type of franchise in which the Franchisor
grants the franchisee the right to operate a single operation at
a specified location or within a particular territory.
* Area Development Franchising
In accordance with a "development schedule", the franchisee
agrees to establish a predetermined number of "unit franchises"
within a particular territory.
* Subfranchising/Master franchizing
Is quite similar to Area Development Franchising with the major
difference being that the franchisor grants the subfranchisor
the option of opening the unit franchises herself or selling the
the franchises to third parties. (Common with International
franchising)
* Affiliate Franchising
This type of set up is typically used by an owner of an
established business who decides to join/affiliate with a
franchised chain.
This allows for the benefit of the franchises brand. This is
common with many real estate.
* NonTraditional
This type of set up is customized between the franchisor and the
franchisee.
Franchises are not the same as Dealerships and distributorships
A dealership or distributorship differs from a franchise in that
there is no FEE involved. Dealers purchase products usually from
the manufacturer at wholesale prices.
Note however, that a dealership can become a Franchise IF a FEE
is paid to the franchisor AND the distributor is dependent upon
the franchisor's pay structure.
Considerations when buying a franchise
* There's a benefit to purchasing a franchise that is well known
* Will the franchisor provide ongoing education and support?
* Were demographic studies performed?
* How many of the franchises have closed operation? Why?
* Have you STUDIED the franchiser's Comprehensive Disclosure
Statement? It's required by Law that prospective Franchisee's
are provided Comprehensive Disclosure, a copy of the
franchisor's Standard Franchise Agreement, Audited statements, a
list of the names of all of the Franchisees, as well as a copy
of all documents that require the franchisees' signing.
By law, each of the above must be provided at least 2 weeks
prior to purchase date.
* I've heard the saying, "if you buy a McDonald's, be prepared
to eat burger's for breakfast lunch and dinner." In other words,
your business requires commitment.
Additional Sources of information
*Success Magazine
*International Franchise Association
www.franchise.org
*Franchise Sales Press *Get this magazine since it is known for
its focus on franchise opportunities. Further, they perform
regular interviews with both franchisees as well as with
franchisors.
*SBA Small Business Association
*Brokerage firms and analysts Since stock information on A
public company is useful.
*Franchise Lawyer *Federal Trade Commission Public Reference
Branch
*UFOC "Uniform Franchise Offering circular -- the material that
is provided by law, by the franchisor to the qualified
franchisee. This is likely the most telling of all information
gathered.
*Attorney General's Office
*BBB located in the city of the Franchisor's headquarters.
*Your Banker should have access to the Dunn and Bradstreet
Report on the particular Franchisor.
*Contact the franchisor's franchisee's listed in UFOC. ***
Prepare a list of relevant questions prior to calling.
Purchasing a franchise usually equates to a reduction in
investment risks since the" system" and Franchise name is
established, training and ongoing support is provided, market
research has been conducted... Conversely...
franchise ownership can be costly. Consequently, it is critical
that you investigate the franchise thoroughly prior to
purchasing.
There is a continual rise in the number of franchises.
Obviously, there's a HUGE market for this method of business
ownership. When approached methodically and practically,
Franchise ownership can be Very lucrative and much simpler than
beginning a business from the ground up.
Be wise and ensure that you conduct sufficient research prior to
committment.
If you'll need financial backing, then you will need to create a
business plan. There's a handy Business Plan workbook available
at our site.
Bridging the Gap between Opportunity and Success,
OwnABizToday.com
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About the author:
Due to her terminally ill, physically and mentally handicapped
child, Shawn was FORCED out of the "job market" and FORCED into
"self employment" ...After experiencing a multitude of financial
difficulties.
Now, Shawn is committed to sharing business information and
resources with you so that you too, can become self employed.
