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Understanding Franchise Businesses

With the promise of time freedom and flexibility, many couples these days have their eyes set on the potential of becoming franchise business owners. Franchising, as a business model, has gained tremendous traction and garnered exuberant attention as it offers an alternative to traditional business ownership. Before making the jump, though, one must know the ins and outs of the franchising business. To help guide aspiring franchisees, here’s a comprehensive list of frequently asked questions on franchising. We at The International Franchise Professionals Group (IFPG) make it our mission to empower aspiring business owners with our knowledge and expertise and provide assistance in identifying and investing in franchise businesses.

What is a Franchise?

Simply put, a franchise is a business model which allows individuals — or an entire family — to open and run a business using the branding, methods, processes, and products of a larger company. A franchisor, or the primary business entity, grants permission or a license to a small business owner to conduct business according to a consistent model and brand. In exchange for a license fee and ongoing royalties, franchisees benefit from the established business system that potentially yields profits faster than starting their own company.

Why do People Choose Franchising?

Franchising is an attractive option for couples or families who would rather be in business for themselves, but not by themselves. The franchise business model provides a support system from the franchisor in the form of business coaching, product supplies, brand recognition, established market presence, etc. The turnaround from an established system can be swift and many say that franchisees end up making far higher profits than other types of business ownership. The modern franchise model also allows couples to maintain flexible work hours and allows both partners to contribute to the success of the business.

What Types of Franchise Businesses are there?

Franchising can be applied to almost any business model. From automotive to health and beauty, from food to services, almost all industries are using the franchise model successfully. Some of the most popular types of franchises are quick-service restaurants, retail shops, janitorial services, child care, health and fitness centers, real estate, and automotive services.

How Much do Franchise Businesses Cost?

Franchise fees vary by type and franchisor, typically ranging from $10,000 to over $1M, with the average fee hovering around $30,000. Some franchisors offer discounted franchise fees and financing options for those in need. Franchisees must be aware that there are also other costs associated with the purchase of a franchise such as legal fees and operational costs. There are also ongoing royalty fees which franchisor collect and is usually a certain percentage of gross sales.

What are the Pros and Cons of Franchising?

The pros of franchising include a proven and tested business model, use of an established brand image, readily available training and support, access to resources, access to suppliers, instant customer base, and overall reduced risk. On the flip-side, the cons include lack of control over company directions and operations, royalty payments and franchise fees, reduced independence, lack of creativity and innovation, rigid standards and processes, and stringent franchisor control.

What Kind of Support is Offered by Franchisors?

Most franchisors provide training and support to new franchisees in the form of operating manuals, online resources and tutorials, in-house and on-site training, branding assets, and even access to a network of fellow franchisees. Other support structures such as help with marketing and advertising campaigns, and legal and financial advice may also be available to franchisees.

Where Can I Find a Franchise?

The IFPG is the go-to source for those looking to invest in a franchise business. Our franchises come from all corners of the market, ranging from well-known brands to specialized and unique businesses. Our professional franchise operators and consultants will be able to assist in finding the perfect franchise business and will guide aspiring entrepreneurs through the process of investing in the right business model.

Topics:

Franchising,

Franchise Business,

Franchise Fees

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