What is a business franchise?

Franchise literally means right or privilege. Franchise is an authorization granted to someone to sell or distribute a company's goods or services in a certain area. There are great franchise opportunities and advantages for the new entrepreneurs who want to establish the business with all essential managerial prospects by training, supporting and mentoring all the financial issues of the franchisees.

Franchising is a business approach to expand a business fast wherein a "franchiser" authorizes proven methods of doing business to a "franchisee" for a fee and a percentage of sales or profits.

Why get a franchise?

A franchise is one of the most popular forms for people interested in self-employment, as it provides them with the tools to run a new company but at a far lower personal risk. The reason is simple; by using an established and proven business model, with a recognized brand, the chance of success is significantly enhanced.

Most often, business to business franchises prove to be most successful, with design and print shops proving a strong market to be in as the US strengthens its recovery.

Financial aspects of franchising

When starting a franchise (example, a siomai business franchise), as with starting any other business, there is an initial investment needed. Alongside the right to used the business model, this covers the right to use the organization's name, brands, logos and all associated marketing information be it intellectual or material. Moreover, it also provides the training, support and with the best franchises, help in finding and securing premises.

The initial cost of a franchise is higher than with a regular start-up but, all additional fees are already taken care of, whilst an existing client base and reputation have largely been established.

Market share and position of the franchisee

The most successful franchise companies understand that to effectively gain market share, they need to target geographical areas sensibly. Therefore, the franchisee will get all the support needed to give the operation every chance of success. This will include advice and planning where to set up.

Despite central support, the franchisee maintains autonomy over key factors, allowing local response to business demands to be made.

Financing a Franchise

Another aspect which makes franchises so attractive to entrepreneurs is that they are far more likely to secure financing. Working to a proven business model, creates an environment much less likely to fail. Accordingly, banks and other lenders see business loans made to a franchise investor as a far preferable place to direct their funding, particularly in the present climate.

There is also a greater pool of lenders to choose from, with many other less traditional financial institutions willing to lend to franchisees investing in strongly positioned companies.

For a great many Americans, a franchise has allowed them to take control of their lives and build their family fortune no-end. It is important though, to know what is what. Is a franchise going to give you the life you have always dreamed of? Probably yes, but only if you put your investment in the right place, work hard and stay determined.