Overview

"Franchising", quite simply is a method of doing business. It is an alternative, for many executives, to expand their companies without having to incur the costs of building or staffing business locations. Through the years it has proven to be a very effective way to build a "chain" or "distribution network" comprised of many small business owners all operating under a "common banner" or name.

For instance, the McDonalds Corporation relies on independent business owners to make sure their hamburgers and other products reach consumers in a consistent manner. Sir Speedy's retail locations are owned and operated by independent business owners and not employees. The same is true for many other companies, including Burger King, Holiday Inn, Boston Market, ServiceMaster and so on.

The list of companies who utilize franchising as a means of growing their businesses is impressive, with many being well-known companies you would recognize instantly. Consider this. The chances of these companies raising enough money and hiring enough quality people to expand their companies on their own is highly unlikely. In fact, the only way some of the world's greatest companies have been able to expand is because they have franchised their businesses. In turn, they have created business opportunities for individuals interested in self-employment, which under normal circumstances would never have been made possible.

In its simplest form franchising consists of two business groups: the franchisor (the company doing the franchising), and the franchisee (the independent business owner who buys a franchise).

The franchisor is the company who has developed a successful business and wants to or needs to expand it, but cannot do it all on their own.. The franchisor may have a very successful business but may lack sufficient money or people or time to expand the business as fast as they would either like, or is necessary, due to competition. Therefore, "franchises" are created and are marketed to franchisees, people like yourself who are interested in self-employment, who acquire the rights to duplicate the franchise company's business.

These franchises can come in many business structures such as single-unit franchises which give an individual the right to develop and operate an individual location, to multi-unit or territorial franchises which allow for the development of larger regions of the business.

Franchising is not limited to specific industries or business types. It is used by thousands of companies in over forty different industry groups or sub-groups. It is a very powerful way to expand a business and the growth or speed in which a company can grow can be very significant.

Franchising has created many huge success for both Franchisors and their Franchisees. However, it is not right for everyone and you must understand everything you can about it before you make the significant decision to become a franchisee of someone else's business system.