Franchising is big business. There are nearly 800,000 franchises in more than 120 industries employing over 9 million people in the United States. One in 7 businesses are franchises, and a new franchise opens every 8 minutes of every business day.
Franchising is the dominant creator of small independently owned businesses in the United States and has been for decades — creating economic opportunities for new business owners and leading the nation in job creation.
Franchises offer franchisees a strategic identity. They are an existing business with an established brand. They provide any buyer, a franchisee, the skills, business plans, products and services, steps, processes, trademarks, patents, training and marketing needed for a layman to open and operate an existing business.
Franchising involves two parties, the franchisor and the franchisee. The franchisor is the originator of the franchised business, and the franchisee is a buyer and operator of a site of that franchised business.
What fanchising offers is the opportunity to own and operate an already established business without prior industry experience. Franchising is a contractual relationship between the franchisor and franchisee whereby the franchisor licenses to the franchisee rights to operate a site, use and sell products and services, engage in their established methods and models, usage of the franchisor’s brand’s trademark’s, techniques and processes.
The process of opening a privately owned business can be daunting, especially for anyone not experienced in doing so. Franchisee’s benefit from the franchisor’s experience, established and tested operating systems, site locations, construction, point of sale and software and hardware systems, advanced training, established standards and procedures, equipment and inventory levels, and marketing strategies and procedures.
Franchisees get from franchising a ready-made, quick process of opening a business, bearing brand name and reputation, advertising and support. Franchises provide the training and economic benefits typical of large businesses. Franchises provide “small” business owners the opportunity to “link and join forces” to obtain the benefits of larger-scale businesses.
Franchisees receive brand name recognition, established products and services, extensive training, purchasing power, guidance, advertising and marketing. Franchisees obtain the opportunity to own and operate an already existing and established business.
By Steve Longo and Jim Notaris