HOME BASED FRANCHISING

HOME BASED FRANCHISING
BY: SHAWN PRICE
copyright 2005 shawn price

IS HOME BASED FRANCHISING FOR YOU?

do you desire home business ownership but cringe
AT THE THOUGHT OF STARTING FROM SCRATCH?

possibly a home based franchise is your answer.

a franchise is a business in which "... the
franchisor, the owner and developer of the
FRANCHISE SYSTEM LICENSES [YOU] FRANCHISEES TO
use trademarks, service marks, logos, or
advertising owned or developed by the
FRANCHISOR." (INTERNATIONAL FRANCHISING
association, franchising basics).

WITH SOME FRANCHISE PROGRAMS, THE BUSINESS
operates using the franchisor's brand name only.

OTHER PROGRAMS ARE LESS RESTRICTIVE AND ALLOW
for the usage of both a trade name in addition
to the franchisor's brand name.

common to all franchise programs, the
franchisee[ you] is responsible to pay the
FRANCHISOR, ADVERTISING FEES, INITIAL FEES,
service fees, and or royalty fees.

YOU ARE RESPONSIBLE FOR PAYMENT WHETHER YOUR
business is profitable or not.

ADDITIONALLY, MANY FRANCHISOR'S PROVIDE
educational programs to franchisees before the
inception of the business.

often times, they've done demographic studies
and other studies to ensure that you have
GREATER ODDS OF RETURNING A PROFIT.

MAJOR FRANCHISE TYPES

· unit franchising

IS THE MOST SIMPLE TYPE OF FRANCHISE IN WHICH
the franchisor grants the franchisee the right
to operate a single operation at a specified
LOCATION OR WITHIN A PARTICULAR TERRITORY.

· area development franchising

in accordance with a "development schedule", the
franchisee agrees to establish a predetermined
NUMBER OF "UNIT FRANCHISES" WITHIN A PARTICULAR
territory.

· SUBFRANCHISING/MASTER FRANCHIZING

is quite similar to area development franchising
WITH THE MAJOR DIFFERENCE BEING THAT THE
franchisor grants the subfranchisor the option
of opening the unit franchises herself or
SELLING THE THE FRANCHISES TO THIRD PARTIES.
(common with international franchising)

· AFFILIATE FRANCHISING

this type of set up is typically used by an
OWNER OF AN ESTABLISHED BUSINESS WHO DECIDES TO
join/affiliate with a franchised chain.

THIS ALLOWS FOR THE BENEFIT OF THE FRANCHISES
brand. this is common with many real estate.

· NONTRADITIONAL

this type of set up is customized between the
FRANCHISOR AND THE FRANCHISEE.

franchises are not the same as dealerships and
DISTRIBUTORSHIPS

a dealership or distributorship differs from a
FRANCHISE IN THAT THERE IS NO FEE INVOLVED.
dealers purchase products usually from the
manufacturer at wholesale prices.

note however, that a dealership can become a
franchise if a fee is paid to the franchisor and
THE DISTRIBUTOR IS DEPENDENT UPON THE
franchisor's pay structure.

CONSIDERATIONS WHEN BUYING A FRANCHISE

· there's a benefit to purchasing a franchise
that is well known

· will the franchisor provide ongoing education
and support?

· were demographic studies performed?

· HOW MANY OF THE FRANCHISES HAVE CLOSED
operation? why?

· HAVE YOU STUDIED THE FRANCHISER'S
comprehensive disclosure statement? it's
required by law that prospective franchisee's
ARE PROVIDED COMPREHENSIVE DISCLOSURE, A COPY OF
the franchisor's standard franchise agreement,
audited statements, a list of the names of all
OF THE FRANCHISEES, AS WELL AS A COPY OF ALL
documents that require the franchisees' signing.

BY LAW, EACH OF THE ABOVE MUST BE PROVIDED AT
least 2 weeks prior to purchase date.

· I'VE HEARD THE SAYING, "IF YOU BUY A
mcdonald's, be prepared to eat burger's for
breakfast lunch and dinner." in other words,
YOUR BUSINESS REQUIRES COMMITMENT.

additional sources of information

·success magazine

·INTERNATIONAL FRANCHISE ASSOCIATION
www.franchise.org

·FRANCHISE SALES PRESS *GET THIS MAGAZINE SINCE
it is known for its focus on franchise
opportunities. further, they perform regular
INTERVIEWS WITH BOTH FRANCHISEES AS WELL AS WITH
franchisors.

·SBA SMALL BUSINESS ASSOCIATION

·brokerage firms and analysts since stock
INFORMATION ON A PUBLIC COMPANY IS USEFUL.

·franchise lawyer ·federal trade commission
PUBLIC REFERENCE BRANCH

·ufoc "uniform franchise offering circular --
THE MATERIAL THAT IS PROVIDED BY LAW, BY THE
franchisor to the qualified franchisee. this is
likely the most telling of all information
GATHERED.

·attorney general's office

·bbb located in the city of the franchisor's
headquarters.

·your banker should have access to the dunn and
bradstreet report on the particular franchisor.

·contact the franchisor's franchisee's listed in
ufoc. *** prepare a list of relevant questions
PRIOR TO CALLING.

purchasing a franchise usually equates to a
reduction in investment risks since the" system"
AND FRANCHISE NAME IS ESTABLISHED, TRAINING AND
ongoing support is provided, market research has
been conducted... conversely…

franchise ownership can be costly. consequently,
it is critical that you investigate the
FRANCHISE THOROUGHLY PRIOR TO PURCHASING.

there is a continual rise in the number of
FRANCHISES. OBVIOUSLY, THERE'S A HUGE MARKET FOR
this method of business ownership. when
approached methodically and practically,
FRANCHISE OWNERSHIP CAN BE VERY LUCRATIVE AND
much simpler than beginning a business from the
ground up.

be wise and ensure that you conduct sufficient
research prior to committment.

if you'll need financial backing, then you will
need to create a business plan. there's a handy
BUSINESS PLAN WORKBOOK AVAILABLE AT OUR SITE.

bridging the gap between opportunity and
SUCCESS, OWNABIZTODAY.COM

ABOUT THE AUTHOR:
due to her terminally ill, physically and
mentally handicapped child, shawn was forced out
OF THE "JOB MARKET" AND FORCED INTO "SELF
employment" ...after experiencing a multitude of
financial difficulties. because of her life's
EXPERIENCES, SHAWN UNDERSTANDS THAT IT'S
impossible to predict future circumstances and
thus it's terribly important that
PEOPLE...PARTICULARLY PARENTS, DEVELOP F