An important step in the small business start-up process is deciding whether or not to go into business at all. Each year, thousands of potential entrepreneurs are faced with this difficult decision. Because of the risk and work involved in starting a new business, many new entrepreneurs choose franchising as an alternative to starting a new, independent business from scratch.
Although the success rate for franchise-owned businesses is significantly higher than for independent businesses, no individual franchise is guaranteed to succeed. One of the biggest mistakes you can make is to hurry into business, so it’s important to understand your reasons for going into business, and to determine if owning a business is right for you.
If you are concerned about the risk involved in a new, independent business venture, then franchising may be the best business option for you. But remember that hard work, dedication, and sacrifice are essential to the success of any business venture, including franchising.
What is Franchising?
Franchising is based on mutual trust between the franchisor and franchisee. The franchisor provides the business expertise (marketing plans, management guidance, financing assistance, site location, training, etc.) that otherwise would not be available to the franchisee. The franchisees brings to the franchise operation the entrepreneurial spirit and drive necessary to make the franchise a success.
There are primarily two forms of franchising:
To learn more about the advantages and disadvantages of franchising, the franchisor’s responsibilities, what is contained in a franchise packet, and Understanding the franchise contract, Read the SBA’s "Is Franchising for Me?" workbook and the "Consumer’s Guide to Buying a Franchise".
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