Understanding Franchise Opportunities
The term 'franchisor' refers to the seller of the franchise and 'franchisee' to the purchaser of the franchise. A franchise is a business relationship between the franchisor, who has a tried and tested business concept and yourself who purchases the right to operate a branded business. It will involve a capital investment plus ongoing royalty or management fees based either on sales turnover or as a mark-up on goods supplied for resale by the franchisor.
The franchisor will provide initial training in all aspects of the franchise in order to ensure that you are equipped to run the franchise successfully. The franchisor will also provide ongoing assistance and support to you in all aspects of the franchise operation.
Characteristics of a Franchise
When deciding whether a business is capable of being operated as a franchise it is obviously necessary for you to consider the characteristics of the business. In some ways it is easier to consider the potential by looking at the characteristics that could render a business unsuitable for franchising. These could include:
- products that have a very short life span in the market
- businesses with minimal profitability
- services that require considerable training to reach the required skill level
- businesses with repeat business based on loyalty to an individual rather than a product or service
- businesses that are specific to one geographical area.
In summary, there are no real boundaries to franchising most business concepts provided they meet the basic criteria for a franchise. Franchising can be an excellent opportunity for you to run your own business using an original successful concept with proven marketing and operating methods.
