A Franchise is a form of business that agrees to the rights to sell the product or services of an established business and use their name in a given territory. A franchisee is a person who buys a franchise and signs a franchise agreement.  A franchise can be a sole proprietorship, a partnership or a corporation.  Franchising works best for businesses with a good track record of profitability and are easily duplicated.  A franchise is good for someone who wants to start a business but is apprehensive of starting one from scratch. [1,2]

The advantages of a franchise are: [1]

  • Management and marking assistance
  • Personal ownership
  • Nationally recognized name
  • Financial advice and assistance
  • Lower failure rate

The disadvantage of a franchise are: [1]

  • Large startup cost
  • Shared profits
  • Management regulations
  • Coattail effects
  • Restrictions on selling
  • Fraudulent franchisors

A few of the companies that franchise:

  • Subway
  • McDonalds
  • 7-11
  • Dunkin Donuts
  • Quiznos
  • Flame Broiler
  • Etc…

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