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A Brief Explanation of Franchising
The concept of franchising goes back more than a hundred years—some argue that the idea came about in the Middle Ages, or even earlier—but what exactly is a franchise?  I’m glad you asked!  At its most basic, a franchise is the right for someone (the franchisee) to sell a product or service whose rights of ownership belong to another (the franchisor).  Let’s say I start a home carpet cleaning service.  I write a business plan, create a marketing campaign, invent a catchy name—how about “Steamo-Cleano”—and start doing business in my town.  After a year or two, Steamo-Cleano is making me a nice living, and I decide the concept is successful enough to be duplicated elsewhere.  You’re looking to go into business for yourself and come across information on my company.  After considerable investigation, you decide to open a Steamo-Cleano operation in your town.  Congratulations—you are now a franchisee.  Simple, isn’t it?

Why Buy a Franchise?
As the owner of a franchise, you will enjoy many benefits.  Here are some of the primary elements to consider:

• Instant name recognition—The sign above your store or the logo printed on your van is one that people recognize immediately, thanks to national or regional marketing campaigns and the successful reputation built up over the years by other franchise operations.
• Extensive training—Franchisees learn everything they need to know about running the business from experienced franchise managers at the home office.  Some companies even ask you to spend some time working with an existing franchise operation, which gives you a chance to see things at ground level as well as learn extra tricks of the trade from a franchisee who has seen it all and done it all.
• Ongoing support—Once you’re open for business, the franchisor will continue to provide support in the form of ongoing training—keeping you apprised of new developments in the industry—and marketing campaigns that help spread the word without you having to worry about creating ads or figuring out where to run them.
• Significant buying power—Fast-food restaurants need napkins and dinnerware, daycare centers need diapers and kid-safe cleaning supplies, and auto parts stores need, well, auto parts.  As one franchisee among an entire group of them, the advantage of buying inventory items and supplies in bulk can turn into a huge savings over time.

Do You Have a Franchise Mindset?
To be a successful franchisee, you must possess certain characteristics that allow you to operate comfortably within the system.  First, it helps to have some sense of adventure.  Even though most franchisors seem to cover every aspect of running the business—how to post accounting data, what questions to ask prospective employees, and where to buy your supplies—there is always some risk involved.  Not every franchise operation makes it, although they have a far better success rate than a business started from scratch.  Second, you should be a willing rule-follower.  As noted above, the home office lays out plenty of regulations that the franchisee must follow to the letter.  This is not an excuse to be dictatorial for its own sake.  The parent company has tested these processes over many years and with dozens (or even hundreds) of franchise operations elsewhere, so sticking with the plan is the best way to ensure your success as well.  Finally, you should be willing to put in plenty of effort—and hours—to get the business off the ground and into the black.

A Final Word on Franchising
The franchise concept is not for everyone, but you gain one additional advantage by purchasing one instead of starting an independent business from scratch.  It’s a fact that franchises enjoy faster growth and begin to show a profit far quicker than a non-franchise business.  In a recent Gallop poll of a nearly a thousand franchise owners, the average annual pre-tax income was almost $125,000 per operation!

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