Have you ever dreamed of owning a McDonald’s restaurant? Or maybe a Holiday Inn hotel? Or perhaps you have always wanted to own a Walmart. If so, you may be interested in franchising. Franchising is a great opportunity to own a business without having to start it from the ground up. Many popular restaurants, hotels and store chains in New York are franchises and with the right knowledge you too could one day be a franchise owner.
Buying an existing business versus buying a franchise
Franchising is different than simply buying an existing business. Existing businesses can be one-of-a-kind, while franchises have many locations and are generally household names. If you buy an existing business, you have full ownership of it. While an existing business may have an established customer base, operating expenses and trained employees there is no external guidance, so you could encounter problems as you figure out how to run the business.
Franchising, on the other hand, gives you more guidance than buying an existing business but less control. The franchisor (the owner of the franchised business) sells the franchisee (the independent entrepreneur) the right to use the business’s logo, name and model. Franchisees benefit from brand recognition, promotions and advertising. However, they must follow the rules of the franchised brand regarding how the business is operated.
Two types of franchises
There are two general types of franchises. One is product/trade name franchising. In this form of franchising, the franchisor is the owner of the right to use the business’ name or trademark and sells that right to the franchising. Product/trade name franchising generally focuses on supply chain management. Products will be made or supplied by the franchisor and then will be delivered to the franchisee to sell.
A second type of franchise is business format franchising. In this type of franchise, the franchisor and franchisee have an ongoing business relationship that focuses on business management. In general, the franchisor helps the franchisee select where the business will be located. The franchisor also provides assistance with training, product supply, advertising and sometimes even funding.
Learn more about business formation
Franchising has many benefits over simply purchasing an existing business. It can be a lucrative and rewarding endeavor. Those who want to learn more about business formation in New York are encouraged to explore our firm’s website for further information.