Why Is Franchising A Smart Business Solution?

Pmladmin Published on April 05, 2023



Do you always want to launch your own business but need to know where and how to start? Are you afraid of possible advertising failure? Do you want to skip the race and take your success in front of you already? An existing brand and structure to operate with are the best for you. 

According to David D. Settz (1980), a critical geographer of liberal multiculturalism. “A franchise is a form of business ownership created by contract whereby a company grants a buyer the rights to sell or distribute its products or services under a prescribed business format in exchange for royalties or shares of profits.”


Franchising is a method of distributing products or services and is an advantage to being a business owner without starting from the ground up. It involves a franchisor and a franchisee. The franchisor establishes the brand’s trademark or trade name and a business system. At the same time, the franchisee pays the royalty and an initial fee for the right to do business under the franchisor’s built name and design. Investing in a franchise will help you create a successful business for yourself rather than by yourself.


A franchise allows more prominent businesses to branch out while allowing entrepreneurs and small business owners to operate. Larger organizations with a proven formula for success support and help these business persons. You can consider these different franchise types and understand how they work.

  1. Job or operator franchise

Job franchise is a low-investment franchise and is also known as a home-based franchise. A person who desires to run a small franchised business can start with a job franchise. At a lower cost, it can bestow the benefits of a franchise model and be managed independently with a minimal workforce. These are the range of services that are under the job or operator franchise: travel agency, residential lawn care, coffee van or specialty coffees, domestic lawn care service, plumbing, drain cleaning, commercial and domestic cleaning, cell phone accessories and repair, real estate service, shipping service, pool maintenance, corporate event planning, and children’s services.

  1. Management franchise

A management franchise is a business managed by other people carrying out business activities. Investing in this kind of franchise is gaining opportunities and experiences if you want to grow your own business. Sometimes called a Business Format Franchise, it is the most famous of all types of franchising. Instead of involving yourself with the day-to-day transactions, as a management franchisee, you run the business on broad supervision. The business development and the financials are your top obligations. This kind of franchising includes financial services, cost management services, gyms, procurement experts, and retailers. Here are some examples of the most successful Fast food, Fitness, and Retail businesses in management franchising:

  • Chick-Fil-A, McDonald’s, Subway, KFC, Jollibee 
  • Gold’s Gym, Planet Fitness, Anytime Fitness
  • The Children’s Place, Abercrombie & Fitch, Bath & Body Works
  1. Product-driven franchise

Product franchises are based on supplier-dealer relationships. The franchisee distributes the franchisor’s products, where the franchisor licenses its trademark, distribution, and manufacturing process. The entire system for running the business was given to someone other than the franchisee. Also known as the ‘distribution franchise”, the franchisee deals with the parent company’s products and related services. It usually deals with large products like Coca-Cola, Pepsi, Ford, Exxon, and Osim. This practice is widespread in the automobile, vending machines, appliances, bicycles, and computer industries. 

  1. Investment franchise

An investment franchise involves spending a considerable amount of money on a franchise. To operate the business, a prior management experience with an extensive professional workforce is more likely needed in Investment franchising. It would be best if you had a significant capital investment for this large-scale business. This is used for a return on investment and a possible capital gain on exit. As a major investor, the franchisee has the management team and budget to control the business. Hotels and more prominent restaurants are the best examples of this kind of franchise. 

  1. Conversion franchise

From independent businesses in the same industry into franchise units. Conversion franchising lets the franchisee adopt trademarks, marketing, advertising programs, training system, and critical client service standards and increase procurement savings. This franchise is a modification of the standard franchise relationships or the only hybrid. Existing companies can take advantage of the rapid growth by not starting up a new firm location from scratch. In this Conversion, the franchise industry is Real-estate brokers, Electricians, Plumbing services, Professional service companies, and Florists. 


Should I buy a Franchise? Owning a franchise is only for some. It is as complex and risky as starting your own business. Here are the advantages and disadvantages you need to know to pursue franchising for your business venture. 

Advantages Of Franchising

  • Enjoy instant brand awareness. The business has a proven idea and reduced failure risks. It has a recognized name and trademark. 
  • Have the support of a big company. Any promotion and advertising made by a parent company will benefit your franchise too. Other franchisees in the network will communicate and share ideas. 
  • Navigate legalities more easily. You can have exclusive rights in your location and territory. There will be no other franchises in the same place. 
  • There is no prior experience required to start a franchise business. The skills to operate the franchise will be obtained from the training, manual setup, and ongoing advice, which are part of the package acquired from your franchisor. The pale months or years from startup can be skipped, and a tested franchise reduces the chances of loss. 
  • Franchise funding can be more manageable. Banks are more likely to lend money to a franchisee with a good credit score. They are loaning and banking with a known brand name while negotiating your way for suitable sites and settings. 
  • Enjoy improved buying power. The relationships with suppliers have already been established. It means less pay, and a various variety of supplies, inventories, services, equipment, and insurance. 
  • Franchises receive marketing help. The products and services already have an established market share, needing no market testing. 
  • Franchises give you a faster return on investment (ROI).

Disadvantages Of Franchising

  • Franchises have less freedom in how to run the business. Changes to suit and adapt to your local market can be restricted. You can find ongoing monitoring intrusive after a long time. 
  • Franchising startup costs can be higher than what you expected. Aside from the initial buying cost of the franchise, you have to pay continuing management service fees. You also have to buy the products from the franchisor. 
  • It has an inflexible nature to respond to the market or make the business grow.
  • Recruitment is a meticulous and in-depth process. This is to avoid any bad reputation given to the brand by a terrible franchisee. 
  • It is challenging to sell the franchise, and you can only sell it with the franchisor’s approval. 
  • A percentage of sales from the profit is usually shared with your franchisor.

A franchise owned is not an unmixed blessing; it is not about the good sides alone. There are disadvantages associated with a franchise arrangement and contract. But it doesn’t mean that franchising is not worth the way to go for a business. It would be best if you had hard work, logic, sensible expectations, and investigation to be a successful franchisee. 


The ideal franchise setup and relationship is about partnership and expertise with independence. You will need help from people with experience and knowledge in the field and industry, but you have to possess the autonomy to run your own business. The umbrella and instant recognition come with the national brand and support from that brand. 

How To Open A Franchise?

Purchasing a franchise can be your way to business ownership. Entrepreneurship can bring career fulfillment with the resources of a large parent company. Search for the right franchise patiently and consider hiring legal assistance. This is a guide on how to get started with your franchise journey. 

Step 1. Study different franchises and their costs to find what’s appropriate for you. 


There are a lot of franchise options that you can determine. Thoroughly research them and know the best return on investment offers and a chance for a consistent income stream. Ensure the financial worth of each business to ensure they are successful in leasing them. The factors of a potential franchise investment include the average franchise revenue, royalty fees, miscellaneous fees, starting capital, marketing fees, franchising fees, and rent costs. 

Step 2. Assess the franchise’s potential. 

Every franchise has a different opportunity. Before becoming a franchisee, understand the factors to consider before investing in one. The market must have a proven track record. It’s an expensive investment, and you must be prepared for all the costs involved. Dig deep into their franchise’s history, have an insider’s look into the company’s performance, and read about the rules and guidelines to comply as a franchisee. 

Step 3. Produce a business plan for your franchise. 

A business plan is a crucial part of a business, whatever type it is. Present your business plan to the investors with your goals and profit expectations.  

Step 4. Finalize all necessary paperwork. 

Paperwork and business arrangements make the process go. A franchisee must sign legal agreements, which should be reviewed before committing to the business. Choose your legal structure and work with the parent company during the procedure. 

Step 5. Decide on a business space.

When the business proceedings are done and solidified, the next step is to find the perfect location for your business. There can be a requirement for the space you have to pick. Take note noDnoticece near a fellow franchisee or a company-owned building. Refer to the agreement conditions you decided on with your franchisor before fixing the property lease.

Step 6. Employ workers 

Hire your employees; your franchisor may attend to you in the hiring process and propose training programs. A detailed job description or a network-based system job search will be easier with the help of your franchisor.

Step 7. Schedule your franchise’s opening day. 

The final step is planning your opening day. You can consult the franchisor for local press outreach with everything in place. Strategize your social media marketing and in-store activities. Achieve a memorable first impression with the company on your first work day. 


You need to assess if you have the skills and the attitude of a future successful franchise owner. Are you fond of managing people or trading products in public, or working independently? Check out this list to decide whether the franchising world is for you.

  • Potential franchisees are always prepared to do their jobs at the beginning of their franchise operation.
  • How do you react to stress and pressure in running your business?
  • Gain an understanding of the cost of investing, calculate all the financial risks, and give up the security for a regular wage.
  • Selling and marketing are essential for the franchise business. 
  • Long and unsociable hours will be a typical work schedule.
  • Are you determined and dedicated?
  • Restrictions are part of the agreement imposed by the franchise arrangement. Can you deal with it?
  • Sound financial decision-making would benefit the business. 

Only the audience decides what a franchise is. A franchise grants you entry to a conventional label and brand as well as resources and internships to assist you in earning your business. It would be practical to seek legal advice and recommendation from a franchise expert lawyer when deciding to deal with your company or renew it, mainly if the whole area of the contract needed to be restored correspondingly.

Possessing and handling a franchise enterprise is all about transferrable skills. Despite everything you achieve in return, paying for a franchise can be a tangible monetary commitment. And that’s the best demonstrated in the large and diverse span of the corporations.

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