What Is Franchising?

Franchising is a unique form of distribution of goods and services which generates sales of over 1.5 trillion dollars in the US alone. Different franchises operate according to different mechanisms, but what they all have in common is that when you buy a franchise, what you really get from the franchisor is the right to use their commercial brand and successful business model. That way you start your own business, with your own company and investment, at your own peril, but under the brand logo of a proven market heavyweight. And before you ask, yes – billing is yours and your company’s responsibility.

Imagine for instance that you want to open a pizza parlor. You would have to hire and train employees, to find a suitable location for the restaurant, to outsource the design side of things, to compile a menu, to think of a name, to create uniforms and a website, to buy the right furniture… as well as work at a million other things to get your new business off the ground. If you have no previous experience in these endeavors, you will reach every good decision after having muddled through four or five mistakes. The designer will slow you down and you have to fire him/her and get a new one. The lasagna will prove inedible and you will have to change the recipe. The waiters will turn out to be untrainable brutes and will leave you in a lurch trying to replace them. The uniforms will fade after the first wash and you will need to buy new ones. The software program of the till will crash and will erase all record of the daily/monthly turnover; location may prove a terrible choice and the money you put into renovating the restaurant will therefore have to be written off…. And all the while you will be bleeding clients and money and losing sleep. Hence most pizza parlors close at the rate they are opened, i.e. very fast. You are not alone in walking this road. Most people doing business have been on it. The best ones are the survivors who lived to open a second, third and forth outlet. Despite being the best, they still needed years to get where they are.

Now imagine that you were able to open a pizza parlor in just two months using all the experience and knowledge of those who came before you – the successful survivors. That way you avoid repeating their mistakes and you get to learn from them firsthand how to run your restaurant. They could recommend the location, or even supply you with the quality frozen ingredients you couldn’t find. That’s franchising. The system you are using has been built, tested, improved, branded and it offers you ready-made solutions to problems you know you will encounter.