Franchise 101.

• Position: Small Business Resources: Franchising

Franchising has emerged as a popular way for potential business owners to start a new business. A franchise offers advantages in name and product recognition, proven operation procedures, and volume purchasing power. In this arrangement, the provider, or franchisor, contracts with you, the franchisee, to give you the right to sell or distribute a service or product under the franchisor's system in a particular area.

ADVANTAGES OF A FRANCHISE

* Initial corporate support for start-up

* Continuous management training and counseling

* Existing goodwill and brand-name appeal

* Proven business model

* Proven products and standardized quality

* Some opportunities require no prior experience in that business field

* Buying power and programs

* Development of advertising and promotions programs (both local and national)

* Site analysis

DISADVANTAGES OF A FRANCHISE

* Franchising fees

* Required to share portions of business profits with corporation (sales/royalties)

* Potentially complicated legal negotiations

* Loss of personal control over some aspects of operation (e.g., use of name/ logo for advertising, territory, uniforms, product purchasing requirements)

* Less freedom and opportunity for creativity

* Limited control over pricing, product lines, and suppliers

* Actions by the corporation may...