| Types
of Franchises |
|
Another viable alternative to starting a business from scratch or buying
an existing business is to invest in a franchise. A franchise is a contractual
agreement where you, the franchisee, buy the rights to benefits provided
by a franchisor. You are the business owner but the franchise agreement
may give you various degrees of structure and limitations on some of your
choices.
There are three basic types of franchise agreements:
Trade Name
- Acquire rights to use the franchiser's brand name.
Distribution
Agreement - Acquire rights to distribute the franchiser's products
or services.
Full Franchise
- Purchase a complete business system including processes, name, products,
methods of operation, training, source of supplies and inventory, financial
help, and more.
Blendz
1 | Blendz
2 | Buy Existing Franchise
|
| Benefits
of Franchising… |
- Management training
and consulting
- Customer Goodwill
and known Brand
- Standardization
of quality, products and services
- National, Regional,
Local Advertising
- Loans and Financing
- Proven business
- Centralized Buying
- Territorial Protection
- Increased probability
of success
|
| Drawbacks
of Franchising... |
- Fees and profit
sharing
- Must adhere to
business format
- Purchasing, marketing,
and other restrictions
- Limited product
lines
- Poor training,
consulting, advertising, and other services
- Limited Freedom
as business owner/operator
|
| Benefits
for the Franchisor |
- Quick way to expand distribution and market reach.
- Growth with minimum capital risk.
- Low cost/less inconvenience in finding and training managers.
- Collect franchise fees and royalties.
- Benefits of growth with deferred risk, and responsibility.
- Others
|
| Franchisee
Pays |
- Initial Fee
- Royalties
- Inventory Price
- Leases or Rentals
- Advertising
- Gross Sales and/or
Profit Sharing
|
| Contract
Issues: |
- Initial vs. Continuing
Fees
- Payment Schedules
- Leases Agreements
- Approved Suppliers
- Quality Standards
- Territorial Protection
- Training & Consulting
Available
- Breach of Contract
- Termination, Renewal,
Transfer, and Buybacks
|
http://www.entrepreneur.com/franchises/franchise500/index.html
http://www.franchisezone.com/
http://www.franchisebuyersnetwork.com/
http://www.franchise.com/
|
| Fleet Feet example |
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