Franchise business introduction

Franchise businesses are so common as to be ubiquitous in America today. According to the International Franchise Association, a new franchise business opens somewhere in the U.S. every eight minutes. In fact, about one out of every 12 retail stores is a franchise. Because of the unique way they are run, they present an excellent business opportunity for budding entrepreneurs.

The concept of a franchise is simple: an independent business buys the right to use a large company's name and get access to its expertise. The big company gets a new outlet that will promote its brand and provide ongoing revenue, while the franchisee gets a big leg up thanks to a proven business plan, an established brand, and many different types of assistance and training.

It is important to distinguish between regular chain stores and franchises. In a chain store, the corporate parent owns and runs every location. With a franchise operation, each franchised branch is owned and run independently of the corporate headquarters. Franchisors, as the parent companies are known, can own some outlets directly while franchising others; franchisees can own one local store or dozens of branches across a city, but the basic relationship remains the same.

The nature of a franchise business comes down to a significant tradeoff: franchisees get access to a proven business model while giving up significant control in how they do business. This BuyerZone Buyer's Guide will help you decide if buying a franchise is the right choice for you, teach you how to evaluate potential franchisors, and point out some common mistakes you should avoid.