Franchising

For those of you who may just now be looking into the possibility of buying a franchise, there are a few basic things that you need to know about the franchise option for business ownership. Many people do not realize that franchising, like any other business start up, has many facets all its own, and things that you will need to be familiar with, and to learn before you even begin your search for that perfect option for you. Getting yourself really familiarized with some of the more common terms in franchising helps, yes, but also, it helps to know what sort of franchises there are out there. It's true, for every industry, there is a franchise, but franchises basically break down into three basic types.

Here, we will name those three types of franchises, and we'll explain a little bit about what each one entails.

Product Franchises are the first type of franchises we will look into and explore. A product franchise is a great way for manufacturers to take control of how a retailer gets their product out there. The manufacturer gives the franchisee permission to distribute the product and allows the owner of the retail establishment to use that brand name and trademark to further enhance promotion and built the trust of the consumers. Product franchises are often times a food service oriented business. However, the downside is, sometimes these can be very fad based, so plan your market research accordingly. Steve Steve Rosen, chief executive officer of FranNet, had this to say about product franchises:

"A lot of product businesses are fad-based. It goes in cycles. People love coffee or ice cream or high-fat or low-fat stuff; they love or hate donuts. You've got to take that into account."

A business format franchise is likely to be one of the things that comes up most in your search for that perfect franchise. You'll find that this is a very popular type of franchise and there's a good reason for this. The company usually gives the franchisee not only a great system for running the business itself, but usually again lends the name and trademark of the parent company. Often times, these are very well known brands and they automatically inspire trust, so that is a huge benefit to the business format franchise. The company also typically will provide a great deal of assistance in not only start up, but continued management of the company- so this format is a great way for someone to become a business owner, but without flying blindly. Think of a business format franchise as a sort of safety net to ensure the success of the franchisees that are involved in this.

Manufacturing franchises are another area where big money comes into play and these are also fairly common. These types of franchises usually give a group, or an organization the rights to produce or manufacture a certain product again, with the ability to use that name and trademark for marketing and promotion benefits. This sort of franchising is usually food and beverage, but can sometimes be affiliated with other products as well.