What is franchising? How can it help you with self-employment?

When a brand of a product or service is marketed and sold by someone else, the process is referred to as ‘franchising.’ The term implies methods of practising and using another person’s business techniques. The franchisor in such a case grants the franchisee the right to distribute its products. The benefit of such a business is that the franchisor is in command of the financial part of the business. The franchisee here gets a percentage of gross monthly sales and a royalty fee. An agreement can last from five to thirty years and premature cancellation costs serious paybacks for the franchisees.

The advantage of being in such a business is the back up of a foundation laid by that respectable brand. It carves the way for individuals to start their own business with the backing of an established brand and business process. The chance of succeeding in such a business definitely increases.

Before entering such a kind of business, the person interested pays some money as a deposit to the franchisor. With this payment, the franchisee runs the franchise. Now it depends on the person with how much dedication he/she runs the franchise as he/she would not like to lose the capital sum given to the franchisor.

A popular example of franchising is John S. Pemberton's successful franchising of Coca-Cola. Food restaurants, diners and motel chains then got in the franchisee business as well.