Small Business Franchise

Franchise is a way of doing business or rather an invocative business idea, wherein an established business that is running successfully using tried and tested methods, licenses their trademark as well as the methods they use to produce a product or offer a service to an entrepreneur who is interested in performing their activities. This person is referred to as the franchisee and the business offering the license is referred to as the franchisor. In return for their license, the franchisee will give annual fees and additionally a certain percentage of their gross profits.

What is small business franchise

Small business franchise is where franchise is extended to small business entrepreneurs. There are several areas where small businesses can venture into franchise. Here is a list of some very common small business franchise opportunities that most of us would have come across in our nearby neighborhood itself.

  • Computer-related ventures
  • Crafts and wares
  • Food outlets and restaurants
  • Household goods
  • Music-related services
  • Clothes Retail

Many people take to small business franchise because it offers plenty of opportunities for business growth. The techniques and technology used in a successful and well-established business is used in operating a franchise, which means better chances of success. The various benefits of small business franchise include:

  • Once established a franchisee can quickly expand and set up their offices in many locations, giving them a chance to sell their products or services to a wider audience.
  • Franchisees get a wealth of knowledge on how to run a business from those who are already established and successful and this is one advantage they would not have had if they had to start from scratch. As a result, they can expect a better turn out in their business as what they are doing is something tried and tested and something that works.
  • Franchisee need only to put in the capital to start the franchise. They need not spend money on marketing or go about dong conduct product development research. All this is done by the parent business under whose license the franchisee is carrying out business activities.

Before entering into a franchise, you need to do some research. One of the most important things you must see is a Uniform Franchise Circular Offering (UFOC). This is a document that provides extensive information for a franchisee on the franchise they are thinking of taking up. It is mandatory to get this from the franchisor or franchise broker to know about the details concerning your franchise operations. Supporting documents about results from other franchisee performances and their outcome should also be given as this helps you to come to a rational conclusion on the effectiveness of your decision to start a franchise.

When meeting your franchisor, you need to ask relevant questions to support your decision to take up a franchise and give you assurance that your managerial skills can be put to profitable use in doing so. Here are a couple of useful tips on this:

  • Go to a reputable franchisor. Find out if the franchisor you are considering has abided by FTC and state disclosure laws.
  • Check out if the franchisor is a sole proprietorship, partnership or a corporation. A corporation can give you more training and well-founded methodologies than any other kind of business.
  • What is the franchisor's actual, average, or forecasted sales targets
  • How different is your contract with the franchisor from other franchisees.
  • Will you receive any help in finding location or will you be given a space on lease by the franchisor.
  • Are there any copyrights and patents applicable on the equipment you use, the services you provide and products that you sell
  • Will you be provided any form of finance and what are the terms of offering such finance

Look into the answers you receive and then decide about entering into a franchise operation. In running a franchise what is required is good managerial skills, more than entrepreneurial skills and an excellent communication with your franchisor to turn out success.