Understanding Franchise System of Enterprise

OlufisayoMarch 31, 201121,546 views

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A franchise is a right granted to an individual or group to market a company’s goods or services within a certain territory or location.

Franchising began back in the 1850s when Isaac Singer invented the sewing machine. In order to distribute his machines outside of his geographical area, and also provide training to customers, Singer began selling licenses to entrepreneurs in different parts of the country.

The reason why franchising has been around for decades is that it is a great way for individuals to own and operate their own businesses.

There are many different types of franchises. Many people associate only fast food or eatery businesses with franchising but there are over 120 different types of franchise businesses available today, including automotive, cleaning & maintenance, health & fitness, financial services, and pet-related franchises, just to name a few.

An individual who purchases and runs a franchise is called a franchisee.

The franchisee purchases a franchise from the franchisor. The franchisee must follow certain rules and guidelines already established by the franchisor, and in most cases, the franchisee must pay an ongoing franchise royalty fee, as well as an up-front, one-time franchise fee to the franchisor.

Franchising has become one of the most popular ways of doing business in today’s marketplace.

Today, franchising is helping thousands of individuals to be their own boss and own and operate their own business. Franchising allows entrepreneurs to be in business for themselves, but not by themselves.

There is usually a much higher likelihood of success when an individual opens a franchise as opposed to a mom-and-pop business since a proven business formula is in place. The products, services, and business operations have already been established.

Advantages of Buying a Franchise

There are many advantages to buying a franchise. Some of these advantages are:

Corporate image – The corporate image and brand awareness of the company is already established. Consumers are always more comfortable purchasing items from a familiar name or company they trust.
Training – The franchisor usually provides extensive training and support to the franchise owner.
Savings in time – Since the franchise company already has the business model in place; the franchisee can focus on running a successful business.

Photo by Garrett Vogele on Unsplash

2 comments

Edwin April 3, 2011 - 2:39 AM

Cool info on franchises. I too thought there was only one kind of franchise, fast food ones. Thanks for clearing that up

30 Precious Entrepreneurial Articles You Need To Read and Share November 1, 2011 - 12:53 PM

[...] 17. Understanding Franchise System of Enterprise https://www.entrepreneurshipsecret.com/understanding-franchise-system-of-enterprise/ [...]

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