Consider Franchising As A Business Entry Method?

Answer 1

Among the most common ways to get involved in a new business, Franchising ranks near the top. Historically, as businesses grow, they need to branch out in order to continue building sales and profits. Some of these businesses launch wholly own branches, creating a chain-store where all the employees at all the locations work for the parent company. A franchise business model still allows for brands to grow, but limit their investment in that growth by offering the rights to sell there brands in independently owned stores.

Rather than having a manager overseeing a branch store, a franchise owner is independent of the company whose brand is being sold. After paying a franchise fee and signing a franchising agreement, the store owner agrees to sell the brands of the franchiser in accordance with their specifications. Most franchisees even agree to purchase some or all of their products and materials from the franchiser, allowing the brand to have a consistent look, feel or taste around the world even though each store is owned by someone else.

Because the nature of franchising allows people to quickly get started with a well recognized brand, it is very popular. However, in exchange for a fast start up and the rapid development of revenue streams, business owners pay a lot of money. Exactly how much money depends on the value of the brand. To buy into one of the largest hamburger stores, for example, an initial investment of $1 million or more is required. Less known brands might offer franchises for less than $10,000, but in those cases, demand is softer and franchisees have to help build the value of the brand on their own.

Still, the franchiser usually handles most of the marketing effort and sells products and supplies to the franchisee at reasonable prices, meaning that the franchise owner has only to focus on managing the store and on making sound business decisions. This is in contrast to some �bootstrapping� entrepreneurs who start with virtually no capital and slowly build a business from nothing.

Franchising isn�t for everyone, even for those with enough cash to buy into a brand, but it does offer great ways to get into a successful business to start earning serious money in a hurry.