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Franchising is another way you can experience running your own business without having to build or buy a company. In this instance, franchisees purchase the rights (license) to a franchisor’s proven business model as well as the physical location from which to operate the business. Franchisors already have the infrastructure of the business in place (business plans, distribution channels, branding, packaging, etc.) and the franchisee is trained in the operational procedures for implementation into their location. This eliminates some of the risk taken on by the franchisee because there are already standardized processes and an established customer base with a well-known brand in place (think, McDonalds, Dunkin Donuts, Days Inn, etc.). The franchising model has worked for many and can lead to one franchisee operating many locations, which can be very lucrative.
If you are the type of person who likes to be in full control, this may not be the best option for you. Franchising involves binding agreements in which certain requirements must be met. There is little to no room for independent decision making on the part of the franchisee. Another difficulty in running a franchise is the effects of bad publicity. For example, if an incident happens at a McDonalds in Louisiana and it is widely covered by the media, this could affect your sales despite the good reputation you have built in your community. The incident will be associated with the brand you are licensing, not your own personal reputation. It is also the case that not all franchise systems are comprehensive and some may not be as supportive as others in terms of training and resources.
It is important to conduct research on the franchise you are considering to find out all of the details involved and to make sure it is a good fit for you. You can also consult with lawyers who are specifically trained in franchising agreements.