Chapter 5

Considering a Franchise

In This Chapter

  • Figuring out what a franchise is
  • Learning the types of franchises
  • Finding out about franchise relationships
  • Going through the pros and cons of franchising

Franchising is the engine that drives much of the world's entrepreneurial train. Today, you can't drive down any major street anywhere in the world and not pass by businesses that are part of a franchise network, and those businesses can be in any of more than 120 distinct lines of business. This chapter looks at franchising, not by looking at any particular franchise but by looking at how well you may fit in as a franchisee or maybe as a franchisor. It explores what franchising is and what the franchise relationship is all about. It also introduces you to different types of franchising and examines the pros and cons to help you make an informed decision.

So What Is a Franchise, Anyway?

Franchising is a system for expanding a business and distributing goods and services — and an opportunity for you to operate a business under a recognized brand name. It's also a relationship between the brand owner and the local operator. For example, Wendy's doesn't franchise hamburgers, and Midas doesn't franchise car mufflers. They franchise business systems that provide hamburgers and mufflers to customers — with consistent delivery of products, services, and customer experience.

A franchise occurs when a business (the franchisor) licenses its trade name (the brand, such as Wendy's or Midas) ...

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