By Evan Vitale
When considering the idea of starting and owning a business, many give some serious thought to purchasing a franchise business. This would be along the lines of owning a fast-food restaurant (i.e., Subway, McDonald’s, etc.) or perhaps a cleaning business or a printing service.
Like with any other business idea, purchasing a franchise has its fair share of positives and negatives.
A franchise, according to the Small Business Administration, is a legal and commercial relationship between the owner of a trademark, service mark, trade name or advertising symbol and an individual or group seeking the right to use that identification in a business.
Generally, the franchisee (that would be you) sells goods or services supplied by the franchiser or sells goods or services that meet the franchiser’s quality standards.
The franchisee (that would be you) finances the start-up cost of the individual franchised unit and pays licensing and royalty fees to the franchiser. By paying the fees, the franchiser licenses to you the use of the business name and support. For example, when “Subway Restaurants” advertises on television or in the local newspaper, the franchiser is (basically) helping send customers your way. Advertising and coupons is something the franchiser usually includes as part of the agreement.
Yes, as the franchisee, you own the business. However, you must abide by the guidelines of the franchise agreement, such as the products you offer, signs and displays in your location, uniforms, hours of operation, etc.
If you think a franchise opportunity is right for you, then you should definitely spend some time investigating the opportunity. Don’t get too excited too early. Take your time and do a proper investigation. By law, the franchiser is required to provide to you a “Uniform Franchise Offering Circular” (UFOC) which contains a list of current franchisees. Contact as many of these as you can and ask questions about the franchise.