Why Franchising Works

Today’s consumers are very franchise-oriented. They seek out McDonald’s to grab a burger or Supercuts to get a haircut because they know the names (from franchise advertising programs) and are familiar with the products or services.

Franchising is a path to entrepreneurship for those who lack the business know-how to do it on their own. Franchises offer a systematic approach to setting up shop, providing a business kit with clear guidelines for selling a basic product or service.

But from a business standpoint, what defines a franchise? A franchise is a continuing, almost symbiotic relationship between a franchisor—a company that owns intellectual property and know-how—and a franchisee, who invests money in developing a business using the franchisor’s intellectual property and experience.

It’s this relationship that can mean the difference between success and failure. "Franchising is popular because it’s an avenue for entrepreneurs who have little or no experience in owning or operating a business to be able to go into business and have training available," says Andrew A. Caffey, a franchise lawyer in the Washington, DC, area. "It shortens the time involved (in startup) and addresses the concerns a lot of new entrepreneurs have about who they can turn to for help.               --Entrepreneur.com

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