Franchise Opportunity
by Sam Hirschberg
How Did the Franchise Opportunity Industry Begin?
The first company to start the franchise opportunity industry is still under debate. Some say it was the Singer Sewing Machine Company in the 1860’s who began written franchise contracts to distribute their sewing machines. Others suggest that Benjamin Franklin was the father of franchising when in 1733 he presented a 6-year contract to Thomas Whitmarsh, enabling him to establish himself as a printer in South Carolina using the printing press and types which were owned by Franklin in exchange for 33% of the profits.
In the 1940’s and 50’s millions of military personnel returned home from overseas in search for job opportunities and business opportunities. This influx of opportunity seekers changed the US economy forever, and spurred on franchising which was termed ‘business format franchising.’
Today the International Franchise Association (IFA) reports that there are approximately 760,000 franchise businesses in the United States, responsible for more than $1.53 trillion dollars in revenues and 18 million jobs. What does this mean for franchisees looking for the right franchise opportunity? Well, while it is not lawful as per the Federal Trade Commission (FTC) to make income claims, due to many variables beyond individual control, the IFA reported in 2004, the average yearly net income for a franchisee was $91,630.
The Franchise Industry
The franchise opportunity industry is growing virtually daily. Experts suggest that nearly 50% of all products bought and sold in America today are a result of a franchise business model. Franchise opportunities are showing success as more people are driven to be their own boss, but want to operate a business without accepting 100% of the risk. A franchise opportunity business model lets entrepreneurs “plug into” a proven business system that has already gone through the typical ups and downs that a start up may experience.
How to Choose a Franchise Opportunity
Choosing the right franchise opportunity requires that you take necessary steps to ensure that you understand the process of the opportunity. Franchise opportunity providers, also known as franchisors, must provide an up-to-date Uniform Franchise Offering Circular (UFOC), a document that helps the potential franchisee understand the opportunity in full. The Fitness Together Franchise Corporation and elements therapeutic massage revealed four helpful topics a business owner investigating the right franchise opportunity must take into consideration:
- Business Model: Is the business model built on a solid foundation consisting of proven marketing systems, administrative procedures and proven daily operations protocol? First and foremost, does the business model meet your personal business requirements?
- Location: Site selection is critical. Does the franchisor offer population-based exclusive territories? What demographic policies are in place to ensure quality and quantity of clientele?
- Cost: Several different types of costs are involved and must be carefully considered, including the initial franchise fee, ongoing royalty payments for the services and support, space rental and leasehold improvements, equipment purchases, working capital required to operate and advertising fees.
- Training & Support: What is included in the training program offered by the franchisor and will it prepare you to run all aspects of your business efficiently and successfully? Also, what kind of field assistance, ongoing support and marketing support can you expect from the franchisor? Are the advertising and royalty fees reflected in the quality of support offered? How is the management staff of the location hired and trained?
These are some of the topics that should be addressed and fully explained by a quality franchise and business opportunity. Be sure to do your due diligence, thoroughly reviewing the Uniform Franchise Offering Circular (UFOC), and ensure the original business model which the franchise opportunity is built upon meets your business goals.
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