If you want to start a business but don't really have the funds to do so, there is a way to do it without having to outlay your startup costs yourself. You can buy a franchise and use the good name and infrastructure of an already established company to launch yourself into the business world. Sure you will still have to come up with the money to buy a franchise title but the benefits provided to franchisees far outweigh any expenditure you will incur.
What is a Franchise?
There are several different types of franchise arrangements but in general the term refers to an agreement in which the owner of a product, process, service or in some cases, a name will allow you the rights to it for a fee.
Business Format Franchising
This involves buying a tried and tested business idea for example a fast food or garden nursery chain. In this agreement the owner of the franchise (the franchisor) and the buyer (the franchisee) sign a contract to the effect that a package is sold to the franchisee.
This package will provide for most or all of the requirements needed to start the business successfully. It usually includes things like training of the buyer and staff, a license to use the franchise name, an established customer base, supplies and raw materials, tools and equipment and even promotional material.
A set-up fee may also be charged by the franchisor. This is an ongoing monthly fee based on a percentage of the sales and profits accrued by the business.
The crux of a franchise is that it must be a proven business system that is sold not just the rights to sell a product or service. If you decide to buy a franchise make sure your purchase is a proven one!
