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Examples of Franchise Businesses

Before investing in a franchise, entrepreneurs should consider the different kinds of franchise options available. This FindLaw article provides examples of franchise businesses and some of the considerations in choosing them as your investment.

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Advantages of a Franchise

New businesses are hard to establish. There are a lot of decisions to make. Purchasing a franchise allows franchise owners to share the responsibility and expense in the operation. This allows the business owner to focus on other aspects of the business after their initial investment of a franchise fee.

Entrepreneurs should thoroughly consider the advantages and disadvantages of buying a franchise before deciding.

Types of Franchises

Some of the most successful franchise businesses in the United States involve fast food franchises like:

  • Subway
  • McDonald's
  • Pizza Hut
  • Burger King
  • Dunkin' Donuts

Restaurants are not the only kind of franchise businesses available.

The following are some non-food-based franchises you could purchase for your own business:

  • Restaurants like Chili's
  • Hotels like Marriot
  • Automotive rental businesses like Enterprise
  • Shipping companies like UPS
  • Gyms like Anytime Fitness
  • Tax preparation services like HR Block
  • Cleaning franchises like Merry Maids

Home-based franchises can also be successful franchises to consider.

  • Cruise planners
  • Dream vacation planners
  • Travel agency
  • Coffee News
  • Kona Ice

Each type of franchise comes with its own business opportunities. Franchises are established brands with a built-in customer base and brand recognition.

Franchise Business Models

Franchise opportunities typically fall into one of two business models: Product or trade name franchising and business format franchising.

Product or Trade Name Franchising

The owner has the right to a name or trademark which is sold or licensed to franchisees. You can think of this as a supplier and distributor type of business plan. The franchisee can sell the product or use the trademark or tradename in exchange for a royalty fee.

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.

Regardless of whether you want to buy into product or business format franchising, you should examine the terms of a franchising agreement. The time to do this is before your investment. This helps you better understand the terms and conditions of the deal.

Franchise Agreements

Before you can start running one of your own franchises, you must review a franchise disclosure document (FDD). The franchise company sends this to you at least 14 days before you can sign a franchise agreement.

Franchise agreements may bind you to purchasing goods or services from the franchisor. This can result in better pricing for basic materials or tools than on the open market. Including this in the franchise model frees up your attention for other matters. But having the franchisor's involvement in many of the basic aspects of your business can be frustrating.

Choosing Your Franchise System

Which kind of franchise is appropriate for you depends on how much control you want over your business. Nearly all franchises involve some sort of limitation on the franchisee's activities. The franchise must approve the franchise location. The franchisor also retains control of the real estate it sits on. Even a trade name franchise will have rules about running your business to preserve and strengthen the trademark that you have licensed.

Franchising Costs

A franchise's reputation and success are an essential part of determining its value.

The investment required to establish your franchise varies from franchise to franchise. You will pay an initial franchise fee. Then, you'll continue to pay an annual franchise fee.

Franchises that involve providing business services frequently involve less investment than businesses such as restaurants. Service-based businesses typically have a reduced need for special equipment or facilities, reducing startup costs.

Get Help Choosing the Right Business Franchise

Franchises are attractive to entrepreneurs who don't have business experience. The franchise handles many of the important business considerations in this business model. You'll still need to decide which franchise to purchase for your first small business.

The assistance of a competent attorney with experience in franchising agreements can help you understand and find the right franchise opportunity that fits your goals.

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