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Small Business Resources > Buy a Franchise or Create Your Own Start-Up

Buy a Franchise or Create Your Own Start-Up

So you think you would like to buy a franchise? Franchise or create your own business idea? There is a lot to be said about buying into a franchise system that is proven and working. On the other hand, giving birth to your own idea is very exciting. It’s right next to your first born child! You decide, create your own business or buy a franchise. Either way you’ll be your own boss. Here are a few tips.

Franchise chains can and do fail, just like individual units do. The opportunities are everywhere, and their success and widespread popularity offer endless potential. Franchises operate in businesses ranging from travel agency, business consultancy, print and signage through to the ever popular franchise restaurants and investment levels can range from next to nothing to hundreds of thousands of dollars.

Business format franchising is today the fastest-growing segment of franchising and has spread to virtually every sector of the economy. Business format franchising requires a unique relationship between the franchisor (the owner of the system) and the franchisee (the owner of the individual business), which is commonly referred to as a "commercial marriage". As practiced in retailing, franchising offers franchisees the advantage of starting up a new business quickly based on a proven trademark and formula of doing business, as opposed to having to build a new business and brand from scratch (often in the face of aggressive competition from franchise operators).

A well run franchise would offer a turnkey business: from site selection to lease negotiation, training, mentoring and ongoing support as well as statutory requirements and troubleshooting.

A good franchisor should offer franchisees significant training, which is not available for free to individuals starting up their own business. Franchisors are required by the Federal Trade Commission to have a Uniform Franchise Offering Circular "UFOC" to disclose potential franchisees about their purchase. Be sure to check that you get the contractual rights to a protected area or geographic area of protection (AOP) in which the franchisor will not allow another business with the same or similar brand name as the franchisees to operate. Ideal the franchisors provide managerial training and assistance on an on-going basis and, in some cases, arrange for property leases, provide equipment financing and sale-leaseback programs, and assist franchisees in obtaining financing.

McDonald's is the best example of a fool proof system for every aspect of their business from exactly how many seconds the french fries are cooked to the exact words the employees use when addressing the customers. It is a marketing system for creating an image in the minds of current and future customers about how the company’s products and services can help them.

A franchise agreement will specify the given territory the franchisee retains exclusive control over (the area protection), as well as the extent to which the franchisee will be supported by the franchisor. The Franchise Agreement is the written contract that governs the relationship between the franchisor and the franchisee. Every Franchise Agreement is different, but they all have similar provisions. The franchise agreement is a contract that governs the manner in which you will do business.

As a franchisee you own the business, but you are subject to the guidelines of the franchise agreement, products, store decor, uniforms, where product is purchased, certain advertising guidelines, etc. A franchisee should have the ability to terminate its agreement, with or without clause, and as a matter of right, on the specified anniversary dates by giving at least six months prior written notice to the franchisor. The only contingency for the exercise of the early termination rights should be that at the time of the proposed termination, the franchisee is not in default, and has paid all fees due under the franchise agreement.

Visiting a Franchise Show is one way to investigate franchise opportunities. They help create opportunities to showcase and market franchising systems through events such as exhibitions. This event gives you the opportunity to see and talk with many different franchisors. There is a wider choice than ever before of potential franchisors offering a varied array of business opportunities. For the individual who wants to start a business, franchising offers a wide array of new opportunities.

Training and business expertise Franchisors provide business systems that have been tested and will train you on what you need to know to start and run the business. A well run franchise would offer a turnkey business: from site selection to lease negotiation, training, mentoring and ongoing support as well as statutory requirements and troubleshooting. While they gain the use of a system, trademarks, assistance, training, and marketing, the franchisee is required to follow the system and get approval for changes from the franchisor. Ask to receive a full explanation of the initial and subsequent training programs.

Franchising is one of the strategies a person may use in owning a business. Franchising is becoming a beacon for baby boomers. It is not right for everybody, and those who would tell you that it is may be more concerned with their own welfare than yours. You decide. Franchise or create your own startup. Someone once said, "You have two choices; one, you can help build someone else’s dream or two, you can build your own dream."

About the Author
Dave Meholovitch has more than 35 years experience in building, buying and selling businesses. Dave is the Author of the e-book Who Wants To Be The Boss. In his e-book Dave shares his skills and knowledge about buying or starting a business with no money down. Click Here to find out more about Dave's E-Book.











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