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Examples of a Franchise Business

Businesses can be very complicated to establish. There are a myriad of decisions that need to be made with regard to establishing yourself in the marketplace, developing supply and distribution chains that help get your product into the marketplace, and establishing policies and procedures that help your business to succeed and grow. Purchasing a franchise allows business owners to share the responsibility and expense of many of these activities, allowing them the opportunity to focus on other aspects of the business. Before investing in a franchise, however, it is wise to consider the many different kinds of franchise options available. The following article provides some examples of franchise businesses and some of the considerations in choosing them as your investment.

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Kinds of Franchises

Franchises typically fall into one of two business models.

  • Product or Trade Name Franchising: The owner holds the right to a name or trademark, which is then sold or licensed to franchisees; or
  • Business Format Franchising: The franchisor and franchisee have an ongoing relationship in which the franchisor provides services such as site selection, training, marketing plans, and other tools for your business.

Which kind of franchise is appropriate for you depends on how much control you want to have over your business. Nearly all franchises involve some sort of limitation on the franchisee's activities. Even a trade name franchise will have rules about how your business is run in order to preserve and strengthen the trademark that you have licensed.

Franchise agreements may bind you to purchase goods or services from the franchisor. This can result in better pricing on basic materials or tools than could be found on the open market and free up your attention for other matters. On the other hand, it can be frustrating to have the franchisor's involvement in many of the basic aspects of your business.

Regardless of whether you are interested in product or business format franchising, you should closely examine the terms of a franchising agreement prior to investment to better understand the terms and conditions of the deal.

Additional Considerations

A franchise's reputation and success is an important part of determining its value . Some of the most successful franchise businesses in the United States include Subway, McDonald's, Pizza Hut, Burger King, and Dunkin' Donuts; but restaurants are not the only kind of franchise businesses available.

Some business types are more appropriate for franchising than others. Restaurants, hotels, resorts, auto rental businesses, shipping companies, gyms, tax preparation services, and cleaning companies are all business types that have developed into successful franchises.

The amount of investment required to establish your franchise is another important consideration. Franchises that involve providing services frequently involve less investment than businesses such as restaurants. Service-based businesses typically have a reduced need for special equipment or facilities, which reduces the startup costs.

Get Help Making Franchise Investment Decisions

Franchises are very attractive to investors who haven't previously started businesses since the franchise handles many of the important business considerations. You'll still need to decide which franchise to purchase and try to understand the complicated legal agreements that will impact your business after the purchase is complete. The assistance of a competent attorney with experience in franchising agreements can help you find the right franchise opportunity and start off on the right foot.


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