What do you need to know about franchising before getting started?
If you are planning to buy a franchise business, you should know that it is one of the best methods to run a business successfully. It is not easy for everyone to run a business smoothly and take into account all the decisions you need to make on a daily basis.
What is franchising?
The definition of franchising differs from business to business. One of the most common forms of franchising is the business format of franchising. This occurs when a business owner readily agrees to offer a license to another person or business. This is the franchise, and that person is then allowed to use the original businesses data in a particular area.
As soon as the business is bought, the franchisee can than sell the products of the franchisor but only by following the name and trademark of the franchisor’s company. This can benefit the brand image of the franchisor and increase sales nationally. In return, the franchisee pays a fee and takes a percentage of the royalty on sales.
Other types of franchisees:
• Distributorship and dealership – Here, you can sell products but it is not obligatory to use the franchise name and you have more liberty in managing the business. • Agency - You just need to sell the services or goods on behalf of the dealer. • Licence - A licence provides you with the right to produce and sell products from the franchisor. In such cases, there are no limitations on how to run the business.