Properly chosen and implemented, franchisees can be a great way for your new business to get in on opportunities (and profits) that you would otherwise miss out on. I like to think of them as diamonds on the beach. You see the diamonds lying on the sand but try as you might, you can't pick them up, until you team up with someone else who knows the trick of scooping them up.

By teaming up with other people or businesses in a franchisee model, you can:

• Extend your marketing reach
• Access needed information and resources
• Build credibility with your target market
• Access new markets that would be inaccessible without the partner

You're also able to do much more advertising and promotion than you could on your own, bringing out crowds of customers for your joint event.

The History of Franchising

Franchising began back in the 1850's when Isaac Singer invented the sewing machine. In order to distribute his machines outside of his geographical area, and also provide training to customers, Singer began selling licenses to entrepreneurs in different parts of the country. In 1955 Ray Kroc took over a small chain of food franchises and built it into today's most successful fast food franchise in the world, now known as McDonald's. McDonald's currently has the most franchise units worldwide of any franchise system.

Today, franchising is helping thousands of individuals be their own boss and owning and operating their own business. Franchising allows entrepreneurs to be in business for themselves, but not by themselves. There is usually a much higher likelihood of success when an individual opens a franchise as opposed to a mom and pop business since a proven business formula is in place. The products, services, and business operations have already been established.

Our Definition of a Franchisee

Ideally, a franchisee is a strategic alliance where the franchisee remains in control of his business but is entitled to help from us. Assuming they reach a point where they find they are stuck, they can then use our intellectual inputs and goodwill to move forward. The billing is done in our government compliance numbers in order to allow the franchisee to focus primarily on business growth and generating wealth.

There are many different types of franchises. Many people associate only fast food businesses with franchising. In fact, there are over 120 different types of franchise businesses available today, including automotive, cleaning & maintenance, health & fitness, financial services, and pet-related franchises, to name a few.

How Franchising Works

If you are thinking about buying into a franchise, it is important to first understand exactly how franchising works, what fees are involved, and what is expected of you from the franchise company.

An individual who purchases and runs a franchise is called a "franchisee." The franchisee purchases a franchise from the "franchisor." The franchisee must follow certain rules and guidelines already established by the franchisor, and in most cases the franchisee must pay an ongoing franchise royalty fee, as well as an up-front, one-time franchise fee to the franchisor. Franchising has become one of the most popular ways of doing business in today's marketplace. In most cities you cannot drive three kilometers without seeing a nationally recognized franchise company.

Advantages of being a Franchise
There are many advantages to being a franchise. Some of these advantages are:

• Corporate image - The corporate image and brand awareness of the company is already established. Consumers are always more comfortable purchasing items from a familiar name or company they trust.
• Training - The franchisor usually provides extensive training and support to the franchise owner.
• Savings in time - Since the franchise company already has the business model in place you can focus on running a successful business and not waste time on figuring out the successful business processes.

There is a reason why franchising has been around for decades. It is a great way for individuals to own and operate their own business. If you are thinking about buying a franchise, do your homework, research the company, and consult with a franchise consultant or franchise attorney before making a final commitment.

How to Get a franchisee business Started

When it comes to starting a business, many people think of buying a franchise as a shortcut to success. While there is some truth to this, not all franchises are created equal, and not everyone is cut out to be a franchisee.

Is there a franchise in your future? Here are the advantages and disadvantages of buying a franchise and what to expect when buying a franchise to help you decide.

Advantages of Buying a Franchise

• Lower Failure Rate - When you buy a franchise, you are buying an established concept that has been successful. Statistics show that franchisees stand a much better chance of success than people who start independent businesses; independent businesses stand a 70 to 80 percent chance of NOT surviving the first few critical years while franchisees have an 80 percent chance of surviving (Michael M. Coltman - Franchising in Canada: Pros and Cons, Self-Counsel Press).
• Help with Start Up and Beyond - You get a lot of help starting your business and running it afterwards. Many franchises are, in fact, turnkey operations. When you buy a franchise, you get all the equipment, supplies and instruction or training needed to start the business. In many cases, you also get ongoing training, and help with management and marketing. Your franchise will also reap the benefit of the parent company's national marketing campaigns.
• Buying Power - Your franchise will benefit from the collective buying power of the parent company as the franchisor can afford to buy in bulk and pass the savings along to franchisees. Inventory and supplies will cost less than if you were running an independent company.
• Star Power - Many well-known franchises have national brand-name recognition. Buying a franchise can be like buying a business with built-in customers.
• Profits - A franchise business can be immensely profitable. (Think of Macdonalds and Tim Hortons, for instance.)

Disadvantages of Buying a Franchise

• Their Way or The Highway - The main disadvantage of buying a franchise is that you have to do it their way - sometimes right down to the way the napkin holders are filled. As a franchisee, you are not the one actually making key decisions and some franchisors exert a degree of control that you may find excruciating.
• Ongoing Costs - Besides the original franchise fee and royalties, a percentage of your franchise’s business revenue will need to be paid to the franchisor each month. The franchisor may also charge additional fees for services provided, such as the cost of advertising.
• Ongoing Support? - Not all franchisors offer the same degree of assistance in starting a business and operating it successfully. Some are just startup operations – and everything after startup is up to you. Others make promises of ongoing training and support that they don't follow up on.
• Cost - Buying into well-known franchises is very expensive. If this is your choice, you will have to have extremely deep pockets or the ability to arrange the necessary financing.
• Shark-Infested Waters - Buying a little-known, perhaps inexpensive franchise can be a real gamble. Just because a business is offering franchises is no guarantee that the franchise you buy will be successful. In some cases, franchising is the business; all the franchisor is interested in is selling more franchises. Whether or not the individual franchises are successful is irrelevant to them. This is not to say that no little known, inexpensive franchises are worthwhile, but just remember that any franchise you're thinking of buying needs to be investigated carefully.
  
  Let’s suppose, though, that you’ve found a franchise that interests you and that appears to be a solid opportunity for a franchisee. What do you do next? The franchise application, interview and contract are the next step towards becoming a franchisee.

The Franchise Application

The first step in buying a franchise is to contact the franchisor operating a franchise that you’re interested in. Usually when you express an interest, the franchisor will expect you to complete a questionnaire or application form.

Do not be surprised that the franchisor’s questions include detailed questions about your finances. A franchisor will want to know about your personal assets, for example, because he or she wants to make sure you have a fall-back position to carry the business in case it runs into financial difficulty.

You will probably also be asked about your spouse’s financial situation. Once again, the franchisor wants to be sure that both of you are prepared to make the financial commitment necessary to start and run the franchise successfully.

You’re also sure to be asked questions about your experience, background, and even aspirations, questions designed to help the franchisor determine whether or not you’re the kind of person he or she feels will be able to run the business successfully and fit into the franchise model.

This second point is especially important to franchisors, because successful franchises depend on the uniform application of the system they have developed. They do not want people that they view as too independent, or people who are going to “gum up the works” because they can’t resist experimenting or applying their own ideas.

The Interview

If you "pass" the questionnaire or application test, the next step is usually a meeting with the franchisor, which you can think of as a job interview. The franchisor will continue to explore your interest, commitment and suitability. You, on the other hand, will be trying to find out as much as possible about the franchise.

The Franchise Contract

If the franchisor decides you are a suitable franchisee, you will be offered a franchise contract that lays out the obligations of both parties. You should seek legal advice about the contract and go over it carefully. Like any other contract, some aspects of it may be open to negotiation. And like any other contract, if there are any promises made about the franchisor/franchisee relationship that are not in the franchise contract, get them written in.

Is Franchising For You?

Is there a franchise in your future? Buying a franchise is like buying any other kind of business in that you have to do your due diligence and investigate the franchise fully. However, if you are the right sort of person for a franchise operation and pick the right franchise, being a franchisee can indeed be the fast track to success.