Frequently Asked Franchise Questions

Frequently Asked Franchise Questions

• Why Should I Own My Own Business?
  • Business ownership offers you the opportunity to take control of your career, finances, schedule and future. You will be your own boss, work hard for yourself, and potentially reap the rewards that business ownership can offer.

• How Do I Choose The Right Franchise?
  • Deciding which franchise is right for you is a huge decision. The right business should not only interest you, but the initial investment amount must fit into your budget and it should enable you to live the lifestyle you desire (do you want more free time, more money, control over your work environment?). Additionally, any business you choose to buy must meet a market demand in your community. If there is no market demand or the area is already saturated with similar businesses, your new business will not have a bright, long future ahead of it. The best advice is to do your research before signing a franchise agreement. Speak with current and past franchise owners and make sure there is in fact a demand for the business in the area you'd like to open the business.

• Why Should I Buy a Franchise?
  • Regardless of whether you have industry or business ownership experience, you can purchase most franchises because they offer complete training, comprehensive support from the home office, a proven business system, and a product or service that has proven itself to be popular and in-demand.

• How Much Does A Franchise Cost?
  • The cost to buy a franchise varies greatly depending on what industry you choose to start the business in, whether the concept requires a storefront, office, home office, or is mobile, what state you buy the business in, and how much overhead your business will require. There are concepts that cost under $10,000 to start and other franchise businesses that require the investor to have millions of dollars in available liquid capital. Additionally, many franchise concepts offer financing or can help you gain financing if you're interested.

• Can I Have A Business Partner?
  • This varies depending on the preferences of the franchisor but yes, most concepts will allow you to have a financial partner who may also be an operating partner, if you choose.

• Can I Own More Than One Franchise?
  • Yes, but again, this can vary by franchise concept. Many franchisors will sell area or master franchises within a certain specified territory. These larger territories can be costly. If you own a single franchise and are successful, most franchisors will be pleased to sell you another territory. If you own one concept and would like to purchase another franchise from a different, unrelated brand, this is usually possible unless you plan to buy a competing concept. Make sure to read the entire franchise agreement and also have an attorney who specializes in franchise law look over the agreement before you sign it. Let your attorney know that you plan to purchase another franchise concept in the future, so he can ensure you won't have problems.

• How Can I Receive an UFOC from a Franchise Company?
  • Inquire to franchise concepts listed on Franchise.com. You will then be contacted by the company. If you are seriously interested in potentially purchasing the concept, they will most likely offer you a copy of their UFOC for review before you make a final decision.

• Which States Are Franchise Registration States?
  • Fifteen states have franchise investment laws that require franchisors to provide pre-sale disclosures, known as UFOC's to potential purchasers. These states are California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, Wisconsin.

This Article was taken from http://www.franchise.com/franchise-news/frequently-asked-franchise-questions.cfm

What Is A Franchise

What Is A Franchise?

Franchising is a way of doing business. It is a method and marketing tool for companies to expand their market share more rapidly and less expensively.

Some companies, which are thought to franchises, are in fact not franchises. All stores are owned and operated by the company itself (ex. Starbucks, Gap, Victoria's Secret).

There are three basic types of franchises:

1. Distributorships, which grant the right to sell their parent company's product(s) such as auto dealerships (Toyota, Ford, GM, Mercedes, etc).
2. Trademark or brand name licensing, which gives the licensees the right to use the parent company's trademark or brand in conjunction with the operation of their own business ie. beverages (CocaCola) and sport franchises (Miami Dolphins, New York Yankees, etc).
3. Business format franchises, the type most people are familiar with (Subway, Meineke Muffler, Circle K) are the focus of this article.

Business format franchisors offer to their franchisees the license or right to sell its goods or services and/or use its business techniques. The franchisees usually pay an initial fee to acquire this right, and thereafter pay a percentage of their gross sales to the franchisor throughout the term of their franchise contract.

In return for these payments, franchisees gain priveleges, including the right to sell a proven and recognized product or service, to use the franchisor's business practices, and to receive initial training and ongoing support. Additonal responsibilities can and usually do include:

1. Requirements to meet a variety of quality controls for products and services sold.
2. Restrictions on what they can sell or how they can operate using the company's name.
3. Specifications for their business location and site appearance.
4. Prohibitions on the operation of any similar businesses during or after the term of the franchise agreement.

Franchisees usually have an advantage over their nonfranchisee competitors, since they have the rights to use the franchisor's:

1. Brand names, trademarks, copyrights, trade secrets, and patents.
2. Uniform logos, storefronts, and interiors.

By following the franchisor's business practices and offering products that meet the company's standards, franchisees can consistently provide customers with quality goods and services. In the United States the Federal Trade Commission (FTC) and certain states can decide if a franchise is acting as a franchisor. If so, they regulate the activities of the franchisor, as to marketing and sales, and distribution of required disclosure information (Offering Circular aka UFOC) about the franchise to prospective purchasers. Certain other countries have similar regulations. Research has shown that the success rate of new franchisees is much higher than that for other new business start-ups.

This Article was taken from http://www.franchise.com/franchise-news/Basic_What_Is_Franchise.cfm