Franchising 101
Everything You Need to Know About Franchising: What It Is, How It Works, and Why It’s Right for Your Business!
What is a Franchise?
franchising is a form of license that allows the distribution of products, or services under an established brand, or trademark name. By granting access to the operations system manual, unique business knowledge, procedures, and trademarks. A franchise agreement involves a franchisor ( Brand owner), and a franchisee ( Brand recipient ). The “franchise” technically refers to the contract that binds the two parties, but the phrase is more generally used to refer to the actual business that the franchisee conducts.
How Does franchising work?
In a franchise business format, the franchisor offers the franchisee more than simply its trade name. At its core, franchising is communicating the brand value, the support provided to the franchisees, through access to supplies, different stages of training, well-crafted marketing materials, business plan, and ongoing communication. It also provides support with administration, choosing locations, and financial assistance. Most importantly, franchising is about the relationship between the two parties, and how the franchisee fulfills its obligations to supply the goods and services following the system’s brand standards.
Benefits to Franchising?
When a business wants to increase its market share or geographical reach at a low cost, it often opts to franchise its product, and brand name. Franchises are a popular way for entrepreneurs to start a business, especially when entering a highly competitive industry. While franchises provide support, franchisees are responsible for costs relating to startup, accounting, payroll, and other local business functions. 
This allows the larger franchise organization to function on a more streamlined basis. As a result, the organization can be more profitable, and continue to grow with new franchisees. Reducing the risk of business failure, while also reducing the cost of reaching out to customers with your brand and service: The franchising model is a proven way to grow your business, expand your brand, and generate profit by selling rights to a proven business model. By selling a franchise, you are not only offering a great investment opportunity, but also a way to grow your existing business, by offering brand-enhancing products or services. With a proven system in place and an established brand, there is no doubt that franchising can be a very lucrative and rewarding business opportunity.
Important Franchising Criteria to consider:
It is crucial for all parties involved to conduct as much research as possible when evaluating business opportunities. To be able to thoroughly evaluate all the available opportunities and determine which ones to reject and which ones to investigate further, it is important to take your time and conduct thorough research. The criteria for deciding on a particular opportunity include: brand name assessment; demand; competition; cost; history; location; experience; culture; limitations; support & expansion plan; and exit process.
In conclusion
Operating a franchise often requires the use of a tried-and-true business model that has been tested in the market and has processes in place to help its franchisees operate under that trademark. Customers expect consistency, and one of the main reasons franchise systems work is because they offer it. It’s easier to assess the feasibility and profitability of a franchise if you know what license regulations will be applied.