What Makes You a Franchise?
A franchise is a business that uses the trade name and products of an established company in return for paying a franchise fee and income royalties. New franchise locations have a higher success rate than new independent businesses, but franchises sometimes fail.
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Benefits
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Franchisers provide guidance regarding management, marketing and training. Franchises enable new owners to sell a product that already has name recognition, which can help draw customers.
Disadvantages
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Franchise owners have less control over their businesses than independent owners, since the franchiser controls what the business looks like, how it operates and what products it can sell. Franchises must pay royalties, advertising fees and other fees to the franchiser.
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History
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Franchise systems have existed since the Civil War but grew in popularity in the second half of the 20th century. In 2007, the United States had over 450,000 franchises, which employed 7.8 million people.
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