Franchising, also called a franchise business, is considered one of the most successful business models. The Small Business Administration defines franchising as a business model where a business owners sells to an independent entrepreneur the use of his licensing trademarks and methods of business. Franchising is often referred to as chains or store chains.
According to the International Franchise Association there are two main formats for franchising businesses: business format franchising and product distribution franchising, also called traditional franchising. The business format model is the more commonly used form of franchising. More than 120 industries use franchising to expand their businesses and products. These industries include the automotive, lodging, fast food, real estate, and retail products and services.
In business format franchising the franchisee sells to the franchisor the ability to use the tradename, product, services, and the entire system for operating the franchise business. In this business format the franchisee and the franchisor maintain a continued business relationship with the franchisee offering to the new business owner a full range of services. Theseservices can include assistance with selecting a site for the new franchise business, training, supply of product, marketing plans, and possible assistance with obtaining financing.
The product distribution franchise format focuses on a product or products the franchise owns. The franchisee will manufacture and supply the products to the franchisor. This type of franchise model can be found in the bottling, gasoline, automotive and other manufacturing industries.
There are several benefits to owning a franchise business versus going it alone to start a new business. One of the main benefits of buying into a franchise business is when the franchise name or their product is already well-known. If the product or trade name has a good reputation there is already a customer base. This increases the ability to draw in new customers much more quickly than if the product or trade name is new and unknown.
Another benefit in buying into a franchise business is often ongoing support from the franchisee. This can include initial assistance with finding a location for the new franchise business, initial step-up and training, operating manuals, and help with marketing. Other support can include newsletters, toll free numbers, websites, workshops and seminars.
There are many franchise opportunities available in today’s business market. The vapor market is one of the fastest growing franchise businesses. According to Researchandmarkets.com global market summary, the global e-cigarette market is expected to grow over $50 billion by 2025. They state the e-cigarette market will see staggering growth through 2017.
The benefits of owning a franchise business out-weigh the benefits of starting a business from scratch. Having a new business with a preset business model and built-in support system enables a new business to be set up and running quickly. If the franchise has a well-known name or product there will already be a built-in customer base. Ongoing support from the franchisee helps the business owner to navigate the learning curve of owning a new business and grow the business into a successful venture.
References:
- Small Business Administration. “Franchise Businesses.”
28 March 2016
https://www.sba.gov/starting-business/how-start-business/business-types/franchise-businesses
- International Franchise Association. “What is Franchising”
30 March 2016
http://www.franchise.org/what-is-a-franchise
- com. “Global E-cigarettes & Vaporizer Market Analysis & Forecast Through 2015 to 2025” Summary.
30 March 2016
http://www.researchandmarkets.com/reports/3244019/global-e-cigarette-and-vaporizer-market#pos-2
