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What is franchising?
Franchising represents a form of business partnership by which the owner (franchisor) of a product, service or method obtains distribution through affiliated dealers (franchisees). It is not an industry in itself. Rather, it's a way of doing business that can be applied in almost any sector. According to the U.S. Small Business Administration, franchising is the fastest-growing kind of small business and provides a fast, low capital way to build a business.



3 key elements of a franchising operation

  1. Brand: a strong brand is the key element of a franchise system. With a franchise, owners get a brand name, an image of quality and success and become a representation of an organization’s existing reputation.
  2. A proven method of running a successful business: Fundamental to a successful franchise system is a tested and executable business model that could be repeatable and duplicable. Franchisors need to provide training and assisting franchisees in the pre-opening phase of their business.
  3. Franchise Fee: When a franchisee decided to take a short cut in running a new business using someone else's successful business system, it is logical to pay a fee for the right of using someone else's brand and operating system. Moreover, franchisee is expected to pay for franchisor’s ongoing support.