There are many different types of business individuals throughout the world, but one type of person that would take up a franchise as their own and succeed at it someone who has an entrepreneurial type of attitude. There are many reasons for investing in a franchise, but an individual who is a real go-getter and is able to get things done will realize the true value of owning a franchise. Many people throughout the world have realized that franchises are good investments to take advantage of and if you have never considered it until now then perhaps it is time to put your business thinking cap on. Here are some reasons why so many people consider franchises good investments:

Just Plug It In!

Essentially, all you have to do to a franchise is just plug it in. In other words, though, the old phrase of “if you build it then they will come,” is certainly true in the view of the franchise-owning individual. Since the name of the franchise is a store that is usually pretty much known throughout the nation, chances are that people will be instantly attracted to the business. For example, if you build a franchise of Starbuck’s next to an apartment complex and it is closer to them than any other Starbucks around then chances are that you’ll be in luck and have chosen a good spot for the franchise.

Copyright Ownership

Another great thing about owning a franchise is that you have the ability to use the copyright of the original company. Of course franchise owners won’t want to do anything to damage the reputation of course, especially since the franchise is trying to succeed, but being able to advertise that you own a part of the company is a great accomplishment for many people! Franchise owners have the ability to advertise coupons in the company’s name, give out discounts, as well as many other benefits that come along with owning a franchise package! Furthermore, many of the customers won’t even know that you’re a franchise of the company but will treat your store as if it was the company store itself!

Possibility of Profit in the First Year

The franchise that you build will most definitely make some sort of profit in it’s life, but a franchise usually has the possibility of producing a profit or profit margin within the first year! The reason for this is mainly that it usually doesn’t cost as much to start a franchise as it does to build a business or company from scratch. Those who are starting a franchise, though, will be able to realize profit a lot sooner than they thought!

All of these ideas are the exact reasons why franchises are a good investment! Of course, there are plenty of other reasons why it’s a good investment to get started with a franchise but there are too many to name here. If you have ever thought of owning a franchise then perhaps it’s about time to look for right Franchise Opportunities to get started!

Companies, like soft drink bottlers and distributors, that only license products or services today are more passively involved in the sale of their product or service. They supervise the proper use of their license and collect license fees, but they do not get involved in the actual business operations of businesspeople who buy the licenses. Instead, they are more concerned about limiting the ability of a businessperson to modify the trademark or reduce the value of the licensed product or service. They monitor the sale of their product or service to be sure the licensee offers the product or service in the way specified by the licensing company.

That’s a very different role than the one taken by franchisors. Franchisors do license the use of their trademark, but they take a much more active role in how the franchisee actually operates his or her business using that license. Franchisors put limits not only on the way the franchisee sells the product or service, but also on the way the franchisee operates his or her business. How far that active involvement will go depends upon whether the franchisee is buying business format franchise or is just buying the rights to distribute the product.

1. The franchisor must grant limited rights to use the company’s trade name, service mark, logo, or other advertising symbol.

2. The franchisor must sell the rights to use systems or methods associated with operating the core business.

3. The franchisor receives a payment in return for granting the rights mentioned in items 1 and 2.

When the franchisor is also a manufacturer, the relationship can be different in the FTC’s eyes. When the franchisee is purchasing the rights only to distribute specific products without using the company’s name and identity, then different elements comprise this segment of franchising, called product distribution franchising. The most common companies using this type of franchising are beverage companies, oil companies, and automobile companies. For example, when a dealer sells Saturns or Saabs, it uses the car names on its dealership, but it doesn’t promote itself as a dealer for the General Motors Corporation.

The company that owns the product or service grants a limited license to the person who wants to sell or distribute that product or service. There are two types of franchises that exist today: product distribution and business format. Product distribution franchises involve an agreement between the manufacturer and entrepreneur granting the rights to sell the manufacturer’s product, but do not operate under the name of the manufacturer.

The more common type of franchise today is called business format franchising; the company offering the franchise provides not only the product or service, but also licenses the entrepreneur, who wants to start the business, an entire system for running that business.

All in all, Franchise is actually referring to:

• A right granted to a business by a company to use the company’s name and sell or rent its products and services is called a franchise.
• A license grants permission to engage in a particular business activity.
• The right to use a brand name and distribute a product is a product distribution franchise.
• The right to use a brand name and distribute a product plus the systems needed to operate the local business is a business format franchise.
• The company that sells the right to offer its product or service to a businessperson is the franchisor.
• The businessperson who buys the right to sell the product or services of another company is the franchisee.

Each of these tiers has a different message and function. At the national level, the message is: buy my brand. At the regional brand, the message is more urgent: buy my brand today. And at the local level, the message is even more urgent and specific: buy my brand today from me.

In the best case, these three messages will be consistent and targeted to the right customers. For example, a national TV ad may promote your brand’s new flavoured coffee drink. Its underlying message is: Buy my new drink. At the regional level, a TV ad playing in your local market offers a discount on this new drink for a limited time. (This adds the urgency needed in a regional campaign.) Also at this regional level, franchisees can develop a newspaper insert with a coupon for the drink and the addresses of the franchisees. At the local level, individual franchisees can post the offer on the sign in front of one’s shop and display a poster of the drink behind the cash register. Franchisees can even hire people to distribute coupons or samples anyplace there’s foot traffic, such as the sidewalk, mall, or a special event.

In this way, customers see a consistent message and have an incentive to act on this message. Kurt likens this to a three-legged stool in which each leg supports and reinforces the other. If one goes missing, the entire campaign is in danger of collapsing. Franchisees can opt out at the regional or local levels, but they’d just be working against their best interests.

This system seems to be pretty unique to franchise systems. For example, a chain coffee shop may not offer this type of flexibility to the managers - not owners, as in franchising of their local units. In a national chain, all marketing decisions are made by the corporation, and they must be carried out by their outlets. In franchising, individual franchisees or groups of franchisees can develop marketing techniques that will work in their local market, which is usually defined as the area within three to five miles of the franchise or three to five minutes from it. For example, if you’re in a resort town, you may place spokespeople on the boardwalk, which attracts lots of tourists. If you live in a commuter town, you can post ads in subway stations or trains.

As a conclusion, “There’s nothing else like this system. And when it works, it exceeds anything a corporation can do.”

The first factor is a judgment error. This can be anything from having too little capital to stretching resources too thinly to hiring the wrong people. This type of error is sometimes reversible if caught in time, but not always. And after the negative repercussions become apparent, it’s usually too late to do anything about it. As Robert Greenleaf writes in his work on servant leadership, leaders should become more “aware” than others. This means you are constantly doing the environmental scanning necessary to make the right moves at the right time.

A second primary reason for failure is a development that affects the entire industry and dooms it. Today, this often is referred to as “being disintermediated.” This tends to come from technological shifts that make some products or services obsolete. Imagine being in the cassette tape manufacturing business when CDs hit, or in the buggy-whip business when autos arrived. You’d have to change the entire company on a dime or go bust, two options that are less than desirable. The rise and acceptance of the Internet and other technologies have produced countless ripple effects that businesses must contend with to prevent becoming obsolete.

The third primary reason why franchises fail is a lack of integrity and values. A successful franchise has a solid foundation and all of its parts work together. The parts and people are interdependent, not independent or working at cross- purposes. A strong sense of values also runs through the system and affects decisions ranging from how people will be treated to how money will be invested. This integrity ultimately shows up in the individual franchises as a solid product or service, great customer satisfaction, and happy, motivated employees and franchisees.

If these kinds of foundational values been fully understood, you might avoid any failure in your franchise businesses.

Self-knowledge - Success comes from knowing one’s skills, habits, goals, and limitations.

A cohesive team - The franchisor, franchisee, suppliers, business partners, investors, professional advisers, employees, and one’s family and friends work together in a supportive way.

A quality brand - Quality will attract and retain customers and give you a sense of pride in your business.

A growing industry - Growth isn’t based on trendiness, and there’s still some room to increase one’s market.

A suitable workplace - Whatever the location, one’s workplace is organized, inviting, and represents the brand.

A head for business - Knowing how to operate and manage a business will help prevent fraud and waste.

A hunger for knowledge - Franchising eagles make the most of their training and networking opportunities and realize that there’s always more to learn. In fact. learning must become a lifelong quest. Remember: a stream does not rise higher than its source, so fill yourself with knowledge and you’ll lift yourself up.

Social skills - Franchising will challenge your ability to create and maintain working relationships with your franchisor, brother or sister franchisees, customers, and vendors. This is paramount and one of the prerequisite skills you’ll need to succeed.

A nest egg - Those who are successful have enough capital to grow the business and take care of living expenses at home.

Courage and stamina - Opening or taking over a franchise is hard work, especially at the beginning.

Long-term vision - Franchise agreements typically last between 15 and 20 years, so you must be in it for the long haul.

Motivation - You may get into franchising for your own, unique reason, but whatever it is, you should be motivated to succeed.

A dream - We’ve never seen anyone succeed without a dream and the desire to make it come true. Everything begins with a dream.

Look over this list one more time, these ideas can’t be stated often enough. These keys to success will have a big impact on how well you do in franchising, and how well you do in franchising will have a big impact on your life.

Still, life in general is risky, and franchising, like everything else, isn’t a completely sure bet. There are always unknowns, and sometimes things don’t work out as well as planned, even by the best business plan. Even with the safety net provided by a sound franchise system, there are risks.

Buying franchise opportunities are a huge purchase. Many franchisees have put up what for them is an enormous amount of money with the hopes that they will have a return on their investment. For some franchisees, the ability to work for themselves is worth it. But for others, especially those who want to make a lot of money quite quickly, they won’t be satisfied by their franchising relationship.

Franchises are also subject to business trends, and these are sometimes unpredictable. You may buy into a franchise system that sells this year’s gotta-have-it widgets, only to find that next year’s widget craze makes yours obsolete. The next fad diet may claim that your confection is entirely off limits, and your customers may flee you. Or a new technology may crop up that leaves your service looking primitive. Despite these changes, you’ll still own the franchise, and without some serious marketing or research and development efforts by your brand, your business may suffer.

Another risk relates to earnings. When investigating your franchisor’s UFOC, you may come across their earnings claim in Item 19. But make no mistake: this statement is no guarantee of earnings. This is merely a report of what other franchisees have earned. It doesn’t say that other franchisees in your area have earned this, or that they did so in their first year of business. It doesn’t say that every franchisee has earned this amount. Just like everything else about purchasing a franchise, this statement requires some investigation. The FTC does not mandate providing an earnings claim, so not all UFOC’s contain this information.

In addition, remember that as a franchisee, you aren’t in business alone. You’re taking a risk by entering into relationships with a franchisor, your employees, and your customers. And anything to do with relationships is always full of risk. We humans are always full of surprises. In business, disputes and disagreements will sometimes come up, and you’ll be forced to solve them. You’ll also need to communicate with your contacts at headquarters, so this relationship is also an unknown. And you’ll most likely need to hire employees, smooth things over with customers, and become a credible leader for your employees and in the community. You’d best be ready for these challenges.

Lastly, remember that in a sense, your friends and family are taking this risk with you. Hopefully, they’re there to support you as you take this great leap. But they may try to talk you out of your plans or put up a fuss when you’re busy with your new enterprise. They may resent that you aren’t contributing to the household income for a time, and they may worry about their own futures, too. If at all possible, you must have the full support of your loved ones as you take on the responsibility of owning a franchise. If not, be single-minded and focused, and don’t let anyone steal your dream.

Great. But you’ll need to start small, develop your business, and then think about franchising. It won’t happen quickly, nor will it happen alone. Also, keep in mind that while franchising is an effective way to grow, not every business concept should turn into a franchise. Focus on your core business, then see if franchising is the best way to expand your business.

To become a franchisor, you must have a solid product or service. It must be good, original, and fill a need. It can’t merely duplicate another product or service that’s already out there. It should be successful and profitable, so that you don’t leave your prospective franchisees or your customers in the lurch.

Then you must have an original way of delivering this product or service through your own company, for example. And, what’s more, other people should be able to duplicate this method, too. It can’t just be built on your personality or by making things up as you go along. Your business should look and feel distinct, but you should be able to train people to set up shop just like you, too.

Lastly, you should have a product or service that will stand the test of time. After all, you’ll be issuing franchise agreements that will last a number of years-10 to 20, typically and you’ll want demand for your business to be strong at least a decade from now.

These are the bare minimum requirements you’ll need to become a franchisor. Good luck!