What are the benefits of franchising?

Owning a business and operating it on one's own sounds very attractive to the younger generation, but given today's tough economic times, it is not possible for everyone to manage. It might even be intimidating to buy someone else's business and manage it without any expertise in the field. Then, how does one get the experience they need with a brand people trust? Through franchising.

Massachusetts residents may be wondering what a franchise is. The franchisor, who is the owner of the product or services, gives the franchisee a licensed privilege to do their business-the franchisor obtains distribution through the franchisee. The franchisee pays an initial fee and then ongoing royalties and, in return, the franchisor offers a number of benefits.

First of all, the franchisee gains the use of a trademark, a well-known brand name. It's a proven system, it's working well and the inexperienced entrepreneur will get training in how to use it. The franchisor has already made all the mistakes and done all the research regarding their product, so the franchisee doesn't have to focus on that-they can learn about competitive forces and how to differentiate oneself from the market through the franchisor's experience.

When deciding which franchise to select, an entrepreneur has many different aspects to consider, such as examining the franchise agreement and necessary documents. When one has finalized the business they are interested in, they should look at the real estate the franchise will be located in-is there even a demand for the product or service in that place? Since the process can be overwhelming and one is taking on a huge responsibility through a franchising agreement, it may be beneficial to have experienced representation during contract negotiation.

Source: Entrepreneur, "Franchising," accessed June 12, 2017

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