| An important step in the small business start-up
process is deciding whether or not to go into business at
all. Each year, thousands of potential entrepreneurs are
faced with this difficult decision. Because of the risk
and work involved in starting a new business, many new
entrepreneurs choose franchising as an alternative to
starting a new, independent business from scratch. One
of the biggest mistakes you can make is to hurry into
business, so it's important to understand your reasons
for going into business, and to determine if owning a
business is right for you.
If you are concerned about the risk involved in a new,
independent business venture, then franchising may be the
best business option for you. But remember that hard
work, dedication, and sacrifice are essential to the
success of any business venture, including franchising.
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| A franchise is a legal and commercial relationship
between the owner of a trademark, service mark, trade
name, or advertising symbol and an individual or group
wishing to use that identification in a business. The
franchise governs the method of conducting business
between the two parties. Generally, a franchisee sells
goods or services supplied by the franchisor or that meet
the franchisor's quality standards. Franchising is
based on mutual trust between the franchisor and
franchisee. The franchisor provides the business
expertise (marketing plans, management guidance,
financing assistance, site location, training, etc.) that
otherwise would not be available to the franchisee. The
franchisees brings to the franchise operation the
entrepreneurial spirit and drive necessary to make the
franchise a success.
There are primarily two forms of franchising:
- Product/trade name franchising and
- Business format franchising.
In the simplest form, a franchisor owns the right to
the name or trademark and sells that right to a
franchisee. This is known as "product/trade name
franchising." The more complex form, "business
format franchising," involves a broader ongoing
relationship between the two parties. Business format
franchises often provide a full range of services,
including site selection, training, product supply,
marketing plans, and even assistance in obtaining
financing.
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