So you've done a bit of research and you realize that there are many different types of franchise opportunities out there to invest in. Some are attractive, some not so attractive. So if you're contemplating making an investment by affiliating yourself with a franchise, you need to do your homework and research each type of opportunity to protect against an unsuccessful business. You want to invest in a franchise that will do well, and while learning about each type isn't a sure-fire guarantee that you'll make millions in your first year, it certainly won't do any harm.
Although there aren't any hard and fast rules, you can generally categorize any franchise in one of two ways. These two main groups make up most all of the franchise opportunities available to you. The first is known as product and trade name franchising. The second is called business format franchising.
Big blue chip companies and industry names in the gas (petroleum), automobile, soft drinks and beverage sectors can usually be found under the product and trade name franchising umbrella. While the big company supplies the merchandise, logo and trademarks, and usually takes responsibility for some or most of the advertising, the franchisee doesn't pay royalties on sales. The franchisee sells the services or products provided by the manufacturer. In general, the franchiser will assist in the set-up and advise on the best locations for the business, and continue supplying goods and things such as vending machines (with all the servicing needed to keep them operating successfully) and whatever else is required to sell products.
The second method is business format franchising. An essential part of the business format franchising is the use of trademarks and logos. The franchiser will help with the site selection and the franchise company will determine the design and layout of the business.
It is interesting to note that studies have shown that the color on the walls in an eating area of a fast food restaurant will determine how quickly people will finish their meal. Hence, the quicker people eat the more people they can accommodate in a day. Therefore, franchisers are determined to stipulate to the franchisee something as basic as wall color. The franchiser also has a say in the advertising, training and the service/sales philosophy of the employees.
Convenience stores, automobile services, hair salons and so many others in this industry are just a few examples.
There may be a fee that the franchisee will have to pay up front and it is referred to as the start up costs. Additional payments are the royalties for the continual support of the franchiser.
Having a little more information about franchise business opportunities will better enable you to choose one that is just right for you. Always keep in mind that a name brand franchise will not automatically bring in the big bucks. There are some franchises that require you to have salesmanship qualities. So, although franchise businesses are considered a good career move be comfortable in your decision and choose wisely.
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