Franchising, also called a franchise business, is one of the most popular forms of business models available in new businesses today. The Small Business Administration defines a franchise business as when a business owners sells to an independent entrepreneur the use of his licensing trademarks and methods of business. Franchise businesses are also referred to as chains or store chains.
According to the International Franchise Association there are two types of franchise businesses: business format franchising and product distribution franchising, also called traditional franchising. The business format model is the more commonly used franchise business format. More than 120 industries use franchising as a business model. These industries include the automotive, lodging, fast food, real estate, and retail products & services.
With the business format franchising model the main franchise conveys to the new business owner the ability to use the tradename, products, services, and the entire system of operating the franchise business. A business format franchise supports the new business owner generally from the purchase of the new business through the day-to-day running of the business.
Some of the services the franchise offers can include assistance with site selection, training, product supply, and assistance with marketing. Sometimes the franchisee will also assist the new business owner with obtaining financing for the new business.
The second type of franchise business format is the product distribution, or traditional format. In this type of franchising the franchise manufactures and supplies the franchise products to the new franchise business owner. This type of franchise can be found in the bottling, gasoline, automotive and other manufacturing industries.
A main benefit for buying into a franchise business is a business that already has a well-known name or product. A business that has a product or tradename with a good reputation generally has a good customer base. This helps to draw in new customers quickly.
A benefit of buying into a business franchise format is the ongoing support from the franchise to the new business owner. The type of ongoing support may include help in finding a new business location, step-up of the new business, training, operating manuals, marketing tools, newsletters, toll free numbers, websites, workshops and seminars.
Today’s business market has ample opportunities for franchising. Among the fastest growing franchise businesses is the e-cigarette franchise market. In their summary report, Researchandmarkets.com states the global e-cigarette market is expected to grow to over $50 billion by 2025. The summary also states that the e-cigarette market will see staggering growth through 2017.
The benefits of owning a franchise business include not having to start a brand new business identity, and the possibility of having an already established customer base. A new business that has a preset business model and built-in support system enables a business owner to set-up and begin to run a new business quickly. Having ongoing support from the main franchise and a preset customer base are the essential ingredients that help the franchise business owner to grow a brand new business into a successful venture.
- Small Business Administration. “Franchise Businesses.”
28 March 2016
- International Franchise Association. “What is Franchising”
30 March 2016
- com. “Global E-cigarettes & Vaporizer Market Analysis & Forecast Through 2015 to 2025” Summary.
30 March 2016