What are franchises?
Franchises, also known as chain stores, are businesses operated under a special arrangement. Franchises are moderated industries that follow a set business model, which includes a name, an image, and a set of support services. In exchange for a set-up price and a monthly royalty payment, the franchiser, who owns the trademark of a company, licenses the brand to somebody. The buyer then opens the business and operates it, but the franchises always belong to the original creator. Examples of successful franchises include Gold’s Gym® and Dunkin’ Donuts®. For somebody considering franchises as a business investment, there are many advantages and disadvantages that should be kept in mind. The main advantage of franchises is that the businesses being operated already have a proven track record of success. Opening a McDonald’s, for example, requires no market research, as the owner of the trademark will provide all necessary training and support to the franchisee. This includes site selection
Many of the big names we make use of, eat at, or visit every day are franchises, including quick service restaurants, sit down restaurants and service stations. Franchises allow patrons to visit businesses around the country or world that are fundamentally the same, wherever they may be located. Several basic criteria are shared by nearly all franchise businesses. Franchises are all built around a specific concept, have a good track record of profitability, have broad appeal, and are easy and inexpensive to operate. A franchise is a continuing relationship between the franchisor who owns the name, business operations, and symbols of the company and the franchisee. The franchisee pays for the rights to develop a business using the model owned by the franchisor. The franchisor typically offers training and support to assist the franchisee. Franchise agreements typically require a substantial upfront payment as well as monthly royalty payments. Contract durations vary but typically range
