What is Franchise ?

Once you have written a check for the Franchise Fee, and signed the franchise agreement, you are officially a franchisee. It is now on the franchisor to teach you their system, in a formal fashion. Training can last from three days all the way up to two weeks. It depends on how complex the franchise concept is.

You’ll be trained on the use of their computers and software, their operational procedures, marketing and advertising, human resources, and sales. Some franchisors even have online training modules set up, so that you actually can start training from home, a few weeks before you head to their corporate headquarters.

Franchisees are subject to many franchisor regulations concerning various aspects of business operation and conduct. As the Federal Trade Commission (FTC) acknowledged to prospective franchisees in its Consumer Guide to Buying a Franchise, "these controls may significantly restrict your ability to exercise your own business judgment."

Marketing techniques employed by franchisors, are usually top notch. That is because part of the franchise development process includes testing. Some franchise offerings end up using direct mail marketing to get customers, while some may find that radio advertising proves to be the most effective way to find and retain customers.

Many franchise agreements include stipulations that give the franchisor final say in site selection. Some franchisors also limit franchise territories, and while such restrictions generally prevent other company franchisees from impinging on your territory, they can also act to restrict your ability to relocate once you have become established.

The point is this: You are not the one who has to try out nine or ten different marketing ideas in order to find the one that works the best.  It has been done for you already. In most cases, the franchisor knows what works. They just have to show you how to implement it.

Franchise agreements include many instructions on the ways in which a franchisee must conduct business

The franchisor needs to have great technology. Twice. First of all, the franchisor must make things as efficient as possible for it’s franchisees, so they can concentrate on business growth and development, not payroll, and scheduling. Most franchisors have software programs of their own for their franchisees, who pay for them as part of their initial investment.

These encompass all aspects of a business's operation, from operating hours to accounting procedures to the goods or services that are offered. "These restrictions may impede you from operating your outlet as you deem best," admitted the FTC.

The franchisor must also have top notch software for their own internal operations. Things like franchisee sales figures, royalty payments, email marketing metrics and website statistics are all measured, so that management can stay on top of things, and keep the system growing.

This may be the best part of the franchise business model. As you learn more and more about the franchise offering that you are interested in, you will find that the franchise director or salesperson can only go so far in dispensing pertinent information about the franchise opportunity. It will be time for you to reach out and talk to the network of franchise owners who are in the business that you may want to get into yourself.

You should call 10-15 franchisees of the franchise concept you are interested in. You will be able to get a lot of your questions answered, but it gets better. Undoubtedly, you will find some commonality with a couple of them. These are the franchisees that have given you permission to call them back if you happen to have more questions before you make your decision. Hold on to these names and numbers.

These people will usually go out of their way to help you. They probably had similar help during their own start-up phase, and are more than willing to give it back. Sometimes, close friendships even emerge. After all, they probably went into a business of their own for some of the same reasons that you are thinking of doing so. Talk about a natural bond.

"The franchisor also may require you to purchase supplies only from an approved supplier, even if you can buy similar goods elsewhere at a lower cost."

Appearance Many franchisors cultivate a certain readily recognizable look to their outlets, for they know that such standards, when applied consistently, contribute to national recognition of the company name and its products and services. Franchisees generally accept these regulations willingly, for these standards of appearance in the areas of decor, design, and uniforms have proven to be part of a winning formula elsewhere.

This is just as well, for the franchise owner who does wish to make changes in his business's appearance often has little freedom to do so.

Association with the Franchisor For the small business owner whose franchise is attached to a highly regarded, financially robust franchisor, the association can be a powerful positive in his or her business. Business experts note, however, that a franchise outlet can suffer severe damage if its franchisor is beset with financial difficulties or public relations problems.

"If the franchisor hits hard times, you'll most likely feel them as well," noted the editors of the Small Business Advisor. "You are inevitably tied to the franchisor, not only by contract, but by concept, name, product, and services sold."

It is imperative for prospective franchise owners to make an intelligent, informed decision regarding franchise selection, for once a contract has been signed, the franchisee has committed himself to the enterprise.

Moreover, every franchisor has its own strengths and weaknesses. Several business areas, then, need to be investigated as part of any effective franchise selection process.

Experts counsel prospective franchise owners to evaluate their own personal strengths and weaknesses before signing any franchise contract. Prospective franchisees should also have an understanding of their ultimate business and personal objectives before beginning the search for an appropriate franchise.

The entrepreneur who is most interested in achieving financial security may want to look in an entirely different industry than the entrepreneur who hopes to land a franchise that will enable him or her to devote more time to family life.

Prospective franchise owners need to evaluate which industries interest them. They also need to determine whether the franchisor's principal goods or services are in demand in the community in which he or she hopes to operate. Other industry-wide factors, such as the cost of raw materials used and the amount of industry competition, need to be weighed as well.

The latter issue is a particularly important one, for it can be a fundamental factor in a franchisee's success or failure. The presence of some competition, for instance, often indicates a healthy demand for goods or services in that industry area.

A dearth of competitors, though, might indicate that demand is low (or nonexistent). Similarly, the presence of several competitors might necessitate an examination of whether the market can support another provider in that area, or whether you might have to take meaningful market share from already existing businesses in order to survive.