Why
should you consider a business
franchise of your own?
To
answer this, let us explain
a little about the overall concept
of franchises and how they operate.
We can safely assume that you
are seriously considering the
idea of self-employment for
otherwise why would you be viewing
this site. There are, however,
several ways of entering that
field and we'll discuss some
of these below.
Let's
say, for example, that you've
always been a dedicated felinophile…you
have kept yourself surrounded
by cats as long as you can remember,
read a lot about them, studied
them when you could and in general
consider yourself an expert
in the field. As a result, you've
decided to start a cat obedience
school (uhh…good luck!)
and make that your career of
choice. In our world of "suppose"
there are two ways you can accomplish
this.
First,
you can lease a proper location
(or use part of your home if
you choose), hang up a sign
(make sure to check local zoning
laws first), take out some ads
in the local media (and send
out press releases hoping for
a feature story on your venture)
and announce to the world that
the Jane Doe's School of Feline
Obedience is now open for business.
Then you can sit back and wait
for the rush of customers. Problem
is that no one has ever heard
of you. Most may skip over the
ads without reading them and,
worse yet, someone else may
open the Jones Cat Education
Facility right across the street
from your new location! That
isn't to say there is anything
really wrong with your method.
If there is a demand for your
services, and if some of your
promotion produces results,
you may be a success. There
are no guarantees, however,
in self-employment. Any approach
involves a certain degree of
risk.
Let's
take a look at your second choice.
Suppose James Acme, a world-renowned
cat trainer whose animals regularly
appear on television or are
featured at mall openings everywhere,
operates a chain of Acme Cat-obedience
Schools and you can apply for
a franchise in your area. Should
you opt for this? The minuses
are that you will have to pay
for the franchise and, as well,
pay royalties on each session
you can sell. On the other hand
there are several important
pluses. First, of course, is
the visibility of Mr. Acme.
While no one really has heard
of Jane Doe, many television
viewers have seen Mr. Acme in
action with his cats. It's the
same way that famous franchisors
like McDonald's or Midas Muffler
are better known than their
locally-based independent competitors.
The second benefit is the national
advertising that Mr. Acme sets
up for his chain. He can afford
TV spots and ads in national
magazines that would be beyond
your budget and highly impractical
since most of the people you
would reach would be outside
your geographic area. Mr. Acme
has, in his chain headquarters,
experts who can help you determine
where your business should be
located and assist you with
leasing or purchasing facilities.
As an independent operator you
would have had to hire these
services (if you could find
them, that is!). Further, if
Mr. Acme doesn't provide these
services, and if the contract
you signed when you purchased
the franchise promised he would,
you can seek relief in the courts.
Yes, Mr. Acme will receive some
of the money you might otherwise
have made but he also will assume
a percentage of the risk you
might have taken. It's a trade-off
only you can decide is worthwhile!
If
you are not willing (or not
in a position) to go to the
full extent of purchasing and
operating a franchise, there
is one other way you can enjoy
the value of name recognition.
Let's suppose our mythical Mr.
Acme, the cat trainer, decides
to sell cat food and cat accessories
under his well-known name. Now,
even if you went ahead with
your plan of opening an independent
cat obedience school, you can
still apply for a dealership
or distributorship for Mr. Acme's
line of products. In general
this does not involve any payment
although there may be exceptions.
If you are successful you will
receive the rights to retail
(dealership) or wholesale to
dealers (distributorship) the
Acme line of cat products. Thus
you will gain from any advertising
Mr. Acme does and, as well,
Mr. Acme may provide training
on how to best sell his line
of products. In addition, you'll
probably be granted the dealership
or distributorship exclusively
for a certain area so you needn't
worry about having another competitor
in the same block.
In
summary it should be noted that
when you are employed by someone
else they assume nearly all
the risk and make nearly all
the decisions. You are, however,
guaranteed a fixed income in
return. When you are independently,
self-employed you assume all
the risk and make all the decisions
but you get to keep everything
you make. As a dealer, distributor
or franchisee you and someone
else share the risk, the decisions
and the income. It's up to you
which choice you prefer!
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