What is Franchising

Franchising is a way to distribute the services and goods of a company. There are franchises all over the United States and the world. Most of the stores that you see are franchises. McDonald's, Burger King, K-mart are all franchises. A franchise means that the person or persons who own the business are allowing people to sell the services or goods of the franchisor. They are also permitted to use the name of the business for as long as they are the franchisee.
There are different types of relationships in franchising. They are as follows:
Manufacturer/Retailer - This is a relationship where the franchisee is a retailer and it sells the product that the franchisor has directly to the customer. A good example of this is a car dealership that sells new vehicles.
Manufacturer/Wholesaler - The franchisee is permitted to manufacture and distribute the product of the franchisor. An example of this would be places that sell bottled sodas.
Wholesaler/Retailer - The retailer, who is the franchisee, goes to a wholesaler who is the franchisor, and buys products from them for sale in retail. Sometimes there's a cooperative of a large number of the franchisee retailers, and they form a wholesaling company that they have to buy their products from. Some examples of this would be stores that sell automotive products and hardware products.
Retailer/Retailer - This is when the franchisor markets a product or a service, using a standardized system and common name, through a huge network of its franchisees. This is the format that is the most traditional for a franchise.
The two categories that are listed first in the above examples are usually referred to as trade name and product franchises. These categories include the arrangements that allow the franchisees to distribute the product of a manufacturer in a specific location or in a territory that is specified. This usually comes with the use of the trademark or identifying name of the manufacturer, as long as the franchisee pays royalties and/or fees.
However, when you are talking about a business format franchise, you will find that it differs from trade name and product franchises with the use of a format, or a system that is comprehensive and used for the conduct of the business. This includes things like management system, image and appearance, the planning of the business, and the quality of the goods being offered. Consistency, uniformity, and standardization across every aspect of the business are the hallmarks of the franchise known as the business format franchise.
One thing that we can all relate to is something like the fast food restaurants that are scattered around the world. They are a good example of a franchise. Someone wants to buy a fast food restaurant. There's one that is opening up in the area they live in, so they go for training, they talk to the person who is selling the franchise, they talk to a venture capitalist, and they eventually get to buy the franchise
So when you buy a franchise, like a fast food restaurant, you are buying not only the building, but you are buying the rights to distribute the products that the fast food restaurant sells.
A common mistake that people make about franchises, is that you work for yourself when you own a franchise. In a sense, this is true, but it doesn't mean that you don't answer to anyone simply because you are the owner of that store. You find that you still have bosses - they aren't there every day like a normal boss would be, but they are there all the same.
One thing about franchisors is that they want to see results. Anything that you do reflects on the company. For example, it wasn't too long ago that a fast food restaurant had a problem with rats in the restaurant. Not all of the restaurants had this problem, but all of them were affected because people thought that if one of them had it there was a good chance that others might allow the same thing to happen.
Franchising is not without its risks. You have employees that you have to look after, that can get injured on the job, or harassed by other coworkers. You have customers who may be purchasing food from you, and if there's a problem then you have to deal with it because you are the person that sold them the food. Even if you had nothing to do with it, you are responsible because you sold the product. Then there's always the chance of fires and storm damage to a store, and theft. There are many things in a franchise that can affect how much money you make and how well you will do. Some of them are things that you can control, others are out of your control, but all of them will affect you, whether it's in a good way or a bad way.
That's not to say that franchising isn't a good thing, and something that people shouldn't do. Without franchising we wouldn't have half of the stores that we have available today in the world. There wouldn't be McDonald's everywhere, or WaWa's. You'd have to go hundreds of miles just to find one of them. And forget buying a car because all of the car dealerships would be gone too. Most of the businesses, if they aren't a franchise directly, are affected by a franchise.
Franchises also create a lot of jobs, which helps the economy. When you think about it, what's the first thing that happens when a new store opens up? They need employees, so there you have how franchising affects the economy and gives people the chance to work.
One thing to remember is that franchising is not for everyone. It can make you a lot of money, but it can also be frustrating and difficult if you aren't prepared for it. One of the most frustrating parts of the franchising business takes place even before you become a franchisee. It can take a long time to get someone that will invest in your business, and you may find that you receive many rejections before you finally find someone who believes in you.
Being the owner of a franchise isn't easy – you have to attend meetings and sometimes you have to go all over the world in order to attend seminars that the parent company sets up. You may not have a boss that is hanging over your shoulder all the time, but you have corporate management and they are watching to make certain that you are making them money.
In addition to the start up costs, you will find yourself having to pay fees and royalties just so that you are able to use the products name and the logos. And if you find yourself in a bad franchise, it can be very hard to get out of. You need to read over your agreement to make certain that you understand everything before you sign anything.
What is franchising? Well, it's a business relationship that is necessary both for the economy and for the convenience of the people who live in an area. It can be a great business venture if you are aware of what is involved, but it can also be something that brings a lot of frustration and headaches.
If you are considering going into franchising, do your homework and research the subject well before you make a decision. Know what is involved so that you don't have any surprises. It's a good idea to attend seminars that are about franchising. You can use the Internet to talk to people who are franchisees, and you'll find plenty of people who are willing to give you advice. There are message boards and email groups that you can join that are filled with franchisees and franchisors. Make use of the power of the Internet and find out everything you can about becoming a franchisee. You'll find franchisors and franchisees from all over the world who can give you a personal perspective before you make any commitments or decisions.