FRANCHISING as a business model has been very successful in world economies and franchising has grown in the United States since The Federal Trade Commission (FTC) regulated franchising in late 1979. Franchising grows during recessions when newly laid-off employees and returning military veterans, incoming immigrants, and early retired individuals and corporate downsized are looking for jobs and income to continue to support their American Dream. More Franchisors especially the food industry are converting company owned locations to franchisee.
The benefits emerging out of this activity to the franchisee buyers are faster Start Up, minimal investment, brand awareness, lower risk & business support; whereas for the franchising company it provides capital expansion, fast growth, less corporate overhead, faster market penetration, financial leverage, more avenues to open, quality management and many upcoming with the developments.
The status quo supports franchising and there is cooperation within the status quo that benefits from franchising to hide the very great risk of any small business venture, independent or franchised, because even those who start small businesses and fail after a few years do stimulate the economy in those years that they are working hard and long to try to bring their businesses to break even. The Franchisors are not even held legally responsible for faulty startup estimates because of language in the standard unilateral franchise agreements.
Generally, when a new franchise is just starting up, they will invest a large amount of time and attention to ensure that their franchisees get off to a successful start. This extra care can mean the difference between a bumpy first year (and damage control) and a smooth path to financial stability.
With a new franchise business, you will often be able to choose your territory and negotiate exclusive rights to the area so that you will have a larger customer base on which to draw. With established franchises, it can be difficult to open a branch in a market that is already saturated, and your choice of locations may be limited by franchise agreement terms with earlierinvestors.
With new franchisors, it may be easier to negotiate favorable contractual terms that will help you get off to a strong start. With an established franchise, contracts can often be stringent and lacking in flexibility.Franchising allows someone with management background and business acumen to be in business for themselves, while receiving the training and support necessary to be a huge success. Their options in the traditional workplace may be limited. Or maybe they are seeking a career change, and they recognize the fact that by owning multiple franchise units, or even multiple brands, the road to meeting and exceeding their income goals can be realized much sooner.