Frequently Asked Questions

A franchise is a type of business that allows owners (franchisees) to use the company’s name and brand to sell products and services.  The company that grants these right Is known as the franchisor.  The franchise buyer (franchisee)  receives guidance and support from the franchisor.  Franchise owners receive training, help and support from the franchisor.  Franchisees are required to adhere to operating standards laid out by the franchise so that so that brand integrity is maintained.

Here are some steps you should take as you begin your search for a franchise.  You’ll need to find out about franchises that are of interest to you.  You probably have some franchises that come to mind.  Looking through our extensive directory at The Franchise Exchange would be a good place to begin.  This is a good place to  get in touch with a franchise consultant who can help you with your selections.

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You can buy a franchise with a small amount of money.  Franchise start-up costs vary a great deal.  In order to open a business on a budget, some low cost franchises could be a good solution.  A place to seek financing might be the franchisor.  Some offer financial assistance to veterans, minorities and first time investors.  Bank loans are another source of investment money.  The (SBA) Small Business Association might be another source of start-up financing.  You may find you have resources of your own.

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The franchisor is the parent company that is selling the rights to operate a franchise in a particular location, using the name of the company, branding and operations.  The franchisor will grant the right for a franchisee to run a franchise in a chosen location.  The -franchise will usually charge a start-up fee, pay on-going royalties and sometimes advertising fees.  The franchisor will provide training, advise and support throughout the period of the franchise agreement.

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Picking the best franchise for you depends on many things about you.  What experience do you already have?  How much can you afford to spend?  Do you have knowledge in a particular type of business?  These interests go a long way to your success.  In the end it’s up to you.  You might need help in becoming familiar with what franchises are out there.

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Developing a business plan for a franchise is similar to any other type of business plan.  The franchise will help you with a lot of the information in the Franchise Disclosure Document.  The franchise business plan is an important requirement to other parts of developing your business.

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The cost of a franchise depends on the brand or franchise you are buying.  Some franchises can start for a small investment of $10,000 or less.  Many franchises involve large sums of money.  There is a franchise that works for most investor who are interested in getting started.  You will find this information outlined in the Franchise Disclosure Document (FDD).  You will need to become aware of the start-up costs that you will encounter with each franchise.

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Like all businesses franchising comes with its own risks and strengths.  When buying a franchise you will be given support and training.   Franchises offer immediate name recognition.  With franchising you are also buying a system for success.  Your business will have to abide by franchise rules of operation.  You will need to examine and discuss this with a person who understands franchises and can be of assistance with all aspects of franchising.

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Franchising is a particular way of doing business.  There are two parties to a franchise system.  One part of a franchise system is the franchisor, who lends his name or trademark to a particular business.  The second part of the franchise system is the franchisee.  The franchisee pays royalties and often a start up fee for his ability to do business using the franchisor’s name and business system.

One important trend in franchising today is the globalization.   Another trend is the importance of women and minorities in franchising.  The use of technology is growing rapidly and has had a deep impact on the direction of the franchise business.

As both women and minorities are moving more dynamically into the economy, franchising is a perfect opportunity.  Franchises provide training, arrange for leases, equipment and assist with financing and marketing.

Franchisees are scrutinized by federal regulations.  

The franchise disclosure documents make fraud and deception less likely.  You and your franchise consultant need to evaluate the information provided.  You need to speak with a lawyer and with current franchisees in order to get a clear picture of how the franchise has worked for them.  

A franchise has a record you can look at.  This is part of your protection when investing in a franchise. There are no guarantees but this added scrutiny is a good way to evaluate if a franchise as a safe investment for you.

Think about a store or a business owned by a person or a partnership.  If the business does well, the owner may open a few stores, hire more employees in order to operate the business.  It’s at this point that the entrepreneur who wants to enlarge his operations might open more stores.  Another way to grow this business might be to “franchise” his business.  This would entail the store or business system could be sold as a type of business system known as a franchise.  A person looking for an opportunity or career can become a franchisee.  The franchisee would be buying the business name and system.  A fee and/or continuing royalty payment would be paid to the franchise.

The answer to this question may surprise you.  Many different areas of business are franchises. These might include anything from home cleaning services, repairs, home improvement services.   Many restaurants or fast-food operations are franchises.  Teaching and tutoring services are often franchised.  Home health care and senior living can be franchised.  You will have a wide choice of industries to choose from.

One of the first things you need to do is find a franchise consultant.  He can help you to identify and look into companies that offer franchises.  Your franchise consultant can be invaluable as you begin your journey into becoming a successful franchisee.  You will need to understand what types of franchises are available, the cost of different franchises and the skills you might need to be successful in a particular business.

Certain areas of the franchise industry are growing to meet the desires and needs of society.  As the population grows older franchises are opening to fill this niche.

Service-related industries are up and coming.  Accounting, computer services, children’s services, environmental services and telecommunication services are just some of the types of franchises that might work for you.

Federal regulation requires franchisors to prepare an extensive disclosure document.  A copy of this document of this document must be given to prospective franchisees prior to the purchase of a franchise.  This document is referred to as a Uniform Franchise Offering Circular (UFOC).  This document (UFOC) contains a great deal of information about the franchise: 1) required basic fees 2) basic investment 3) bankruptcy and litigation history 4) a financial statement of the franchisor’s earnings claims (if the company makes one).  This document needs to be evaluated by your attorney, your accountant and your franchise consultant.  This information is very important to your final decision about the company.