What is franchising?

Franchising is when you permit other people to start their own businesses while using the name, brand, and logo of the company you own. Basically, they use your good name and the precedents you’ve set to go into business themselves, and in exchange for this they report to you and hand over a share of their profits, along with reporting to your central management. Some successful franchises include Wal-Mart and McDonald’s.

How to franchise your own business!

Franchising is a common practice among modern businesses, and the first step is to find a corporate lawyer or service firm dedicated to franchising. There are numerous services throughout the country eager to help you in this regard, so it’s important to shop around for someone with a good track record. After all, you will need to establish a franchise which not only provides your customers with what they need, but provides potential entrepreneurs with the guidance and rules they need to succeed. There are also many issues to consider when turning a small, local business into a chain, and it’s important to have good legal and financial advice concerning your business and those of potential franchisees.

Is a franchise right for me or my business?

Not all businesses are meant to be franchises. Generally, businesses which offer products and services with wide appeal and require easy access make good franchises. While restaurants are the ultimate example (indeed, most fast food sold in America is sold from franchised businesses) businesses such as book stores, clothing outlets, and pet shops are also often franchises. While franchises do mean extra hassle and effort, they do offer benefits to those industries which are well suited to them. Wal-Mart, the largest franchise (indeed, the largest retailer in the world) raked in over 387.69 Billion in revenue in 2007, and McDonald’s earned over $22.79 billion. While of course it took many years and thousands of franchises to reach such high levels of revenue, the flexibility and transferability of responsibility offered by franchises ensure that they can expand quickly to meet consumer demand. Starbucks, for example, was able to quickly open many stores to meet demand through franchising, something and non-franchised business, dependent on placing and operating stores through a central authority.

Franchises are a great way to make your business grow. Not only do they offer you the opportunity to make more money by serving more customers in more locations, but they ensure that your stores are staffed by hard working, dedicated franchisees who are dedicated to making your business work.

A coffee shop franchise is a very interesting and unique opportunity to afford, though. Out of many of the coffee shop franchises available, many of them have upwards of $200,000 in startup costs. Aside from the really big coffee and donut giants like Dunkin' Donuts as one example, owning a coffee shop franchise does require a hefty out-of-pocket financial requirement although $200,000 for the average amount for owning a coffee shop isn't too bad at all when compared to other franchise opportunities. One example of a popular coffee company that everyone has practically heard of is the Gloria Jean's Coffee Company. Even though owning this franchise is the exception to a rule, the startup costs for opening up a Gloria Jean's Coffee store is actually between $300,000 and $515,000!

If one would truly think about the opportunity before them, though, the returns that are earned from a coffee shop franchise are well worth the money that is paid for them. Considering the fact that millions of Americans, as well as individuals throughout the world, absolutely cannot continue throughout their morning or day without first grabbing that cup of Jo then one is definitely in luck if they are going to own a coffee shop franchise!

In return for owning a coffee shop franchise store or any other franchise for that matter though, one can receive in return an awesome set of extra hands to help them with their initial startup problems and jitters. Indeed, the headquarters of the company exists essentially to help out the other franchises around the world, so this is definitely the first place one should turn in order to ask if they can change the seating in their restaurant, order coffee from a different supplier, and ask many of the other questions that coffee shop franchises usually have!

Altogether, it definitely is worthwhile to open up a coffee shop franchise on the next corner of your neighborhood! With all the different types of coffee shop franchises around, though, chances are that it will not be too hard to find a store that you like!

Owning a McDonald's or Burger King

Even though you thought that you might never see the two fast food giant's names in a line only separated by a small two-letter word, McDonald's and their rival Burger King are actually two of the most popular fast food franchise opportunities in the world today. There are so many great things about these two companies, but on the flip side there are also some things that many people would rather leave alone when considering opening a franchise. For starters, these two companies already do have a large-sized customer base so franchise owners will not need to worry about attracting a loyal customer base.

On the other hand, though, there are so many fast food restaurant franchises, such as McDonald's, that are starting to get a bad reputation because of the horrible service that is received. Along with opening up a franchise also comes expectations and reputations, so opening up a franchise that already has a bad reputation may not be the best thing to do. In addition, plenty of fast food restaurants (not just McDonald's) are starting to receive bad customer ratings because of the service and messed-up orders that are continually thrown out the window!

The Good about your Franchise

Of course there are plenty of good things as well about owning a fast food restaurant franchise. Perhaps the best thing that people love about owning a McDonald's or a Burger King or even a Wendy's Hamburger joint, though, is the fact that they'll be able to receive generous profits probably within the first year as well! Considering the fact that many McDonald's franchise owners actually make a profit of more than one million dollars each year just shows how profitable fast food restaurant franchises can be. But perhaps the profit side of owning one of these stores is about the only good thing of owning a fast food restaurant franchise, but how much more could you ask for? With over a million dollars at your disposal (or close to it with a lot of fast food franchise locations) each year, chances are that you'll have enough resources to ask for more help, if needed.

Nevertheless, the good and the bad of owning a fast food restaurant franchise should be examined. If you think that this is the opportunity of a lifetime then chances are for you it will be a good venture. On the other hand if you start to smell rotten eggs in the franchise opportunity then the best thing to do would be to stay away!

An initial down payment is required when you purchase a new restaurant (40% of the total cost) or an existing restaurant (25% of the total cost). The down payment must come from non-borrowed personal resources, which include cash on hand; securities, bonds, and debentures; vested profit sharing (net of taxes); and business or real estate equity, exclusive of your personal residence.

Since the total cost varies from restaurant to restaurant, the minimum amount for a down payment will vary. Generally, we require a minimum of $300,000 of non-borrowed personal resources to consider you for a franchise. Individuals with additional funds may be better prepared for additional or multi-restaurant opportunities.

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On the other hand, though, there can be some downsides to owning a franchise. The first downside to owning your own franchise is that you won’t actually own your own company even though you’ll own your own store or other company location! Many people have the desire to actually open up their own store and create a company all by themselves, but owning a franchise is not what that’s all about.

In fact, you are essentially paying for a copyright allowance to be able to use the reputation of the company that you’re working for! Indeed, by owning a franchise you are essentially working for that company. Why else does McDonald’s or Burger King require part of the profits from your franchise? A franchisee owner is essentially working their franchise location in order to send more profits back to the company headquarters, even though that’s not the way that many would like to think about it.

Another downside to owning a franchise, though, could possibly be the contract that you’ve locked yourself into. Considering the fact that the average contract length for a franchise store owner is usually 15 to 20 years at the onset it would truly make it difficult to get out of if a franchise owner was having trouble getting the popularity of the franchise store off of the ground in the first place. Furthermore, there may actually be hefty breach of contract fees as well if, in fact, your franchise doesn’t do as well as projected and fails within the first few years!

The help and resources that a franchise owner might receive from the company may not be worth everything that is paid to the company headquarters as well! Many company headquarters actually have giant startup fees, annual fees, and royalties that must be shared with them, but if the franchise store owner is not able to get adequate help or training then the whole opportunity may be lost in the first place.

Considering all of these things before going down the road of opening up your own franchise is very important. Not only is it important to make sure you understand all the implications of owning a franchise, but making sure one understands the total commitment is also important!

Whatever the case, though, franchises are an excellent way to have your own business and to actually own it. However, if you have ever thought about owning a franchise then probably the first thing that popped into your mind was how you would be able to pay for it. On the contrary, though, your first thought should not be about how you’ll pay for the franchise, but should be about what type of franchise you want to start. Here are a few suggestions of the franchises one can easily get a hold of in the corporate business world.

Fast Food Restaurants

There is probably always going to be an empty spot somewhere throughout the country or the world where a fast food restaurant will be able to fit. One of the things that make fast food restaurant franchise opportunities a great idea is the fact that you are quickly able to turn a profit. Even though it may not be in the first year of owning the franchise (even though it very well could be in the first year) chances are that you won’t have to go that far over the first year in order to realize a profit. Some of the most successful franchises that you probably already could have guessed are McDonald’s Restaurant and Wendy’s fast food restaurant.

Office Supply Franchises

One interesting type of franchise that will allow you to have success is an office supply store. Even though you don’t have to acquire a large office supply store like Staples to be successful, there are plenty of smaller supply stores that specialize in office things, business stationary, and small pieces of furniture like computer desks and chairs. Office supply stores are definitely needed throughout the country which is why it makes them a great franchise opportunity!

On the other hand, there are plenty of other franchise companies to get involved with if you don’t want to start up your own fast food restaurant or office supply store. A donut store franchise, such as one that is purchased from Dunkin’ Donuts or Krispy Kreme, can also be successful since many people already love the morning donut products that they offer! All in all, though, there are plenty of franchise opportunities to choose from, but it just takes a little bit of homework to determine which will be successful!

The Franchise Experience

What exactly is a franchise, though? Simply put, a franchise is an extension of another company; they use the same signs, advertising methods, products, and services of the company that it was derived from. Virtually any type of business is able to be franchised if the terms are set forth in the company contract. For example, restaurants such as McDonald?s, Burger King, and even Wendy?s have the ability to be franchised. Other stores, such as Starbucks, specialty retail stores, as well as plenty of other restaurants and stores have the ability to create a franchise of themselves. In other words, franchises are essentially clones of the company, but the franchise owner is able to make separate decisions apart from the company itself.

Owning a franchise, though, shouldn’t be confused with owning an actual store of the business. Depending on what the franchise is and where it is located, one might have more luck owning an actual store of the business than he or she would with owning a franchise! However, that issue is debatable, but a franchise owner is able to experience all of the same situations as the company owners are.

Even though the company that had a franchise created of themselves still has some control over the franchise itself, such as the specific foods that are used if the franchise is a restaurant, there are some decisions that the franchise owner can make that will have no impact on the company as a whole. For example, franchise owners are typically allowed to change the seating style in his or her restaurant or store, as well as the prices of the products themselves. In certain cases, certain aspects about the products can also be changed with the consent of the company. If you own a franchise, though, the best thing to do would be to contact the company itself to make sure you are allowed to make changes without negating the whole contract!

All in all, franchises are great experiences to have and there are all sorts of benefits one can enjoy from owning one. They are definitely great opportunities to take advantage of if you have the capital to get started! Franchises are essentially clones of another company, and in this way franchise owners are able to make most of the decisions and experience the whole business on their own!