Franchise

Many people dream of owning their own business but are afraid of the risks. Instead of starting a new business, however, one can buy a franchise. A franchise a license issued by a large, usually well-know, company to a small business owner. Under the license, the owner acquires the right to use the company’s brand name and agrees to sell its products. In return, the franchising company receives a percent of the sales.

A major problem for first-time business owners if finding reliable suppliers of the goods and services they need: equipment, raw materials, maintenance, etc. It is easy to choose the wrong supplier, and doing so can be costly, Buying a franchise eliminates much of this problem. Most franchising companies have already found reliable suppliers, and franchise contracts typically specify which suppliers are t be used. This protects franchise owners from the risk of serious losses.

Another advantage of a franchise is that it can save a new business a lot of money on advertising. Advertising one’s product to potential customers is a crucial factor in a business’s success. A franchise owner, however, sells an already popular and recognized brand and also gets the benefit of sophisticated and expensive advertising paid by the parent company.

Finally, a franchise offers more security than starting an independent (nonfranchise) business. The failure rate for starting independent businesses is very high during the first few years; the failure rate for starting franchises is much lower. Finding one’s own way in today’s competitive business environment is difficult, and buying a franchise allows an inexperienced business owner to use a proven business model.