Franchising is the strategic alliance between a franchisor and a franchisee. Franchising is a way of starting a business while using another company’s tried and tested methods. You pay the company for the exclusive right to sell its products or services in a particular geographical region.

Two parties or entities are involved in a franchise agreement – the franchisor and the franchisee.

The franchisor is the party or entity that allows you to use its brand name, logos, technology, etc., for a certain period while you would have to agree to run the franchise according to the company standards. Franchisee, in contrast, is an individual or entity allowed by the franchisor to use its trademark, products, etc., for an agreed fee. The franchisor and franchisee’s goal is to dominate the target market.

For example, Kidzee, one of the popular preschool chains in Asia, is the franchisor that grants individuals the right to operate its preschools for a certain amount of money and assets. Simply put, a franchise invests its assets, such as land, building, etc., money, and other resources for acquiring and operating a Kidzee franchise.

A franchise is a privilege officially granted to do business under explicit guidelines at a particular location for a declared period.

A franchise agreement we mentioned a while ago is the legally approved document that governs the relationship between a franchisor and a franchisee for a specified period. Hence, you need to note that a franchise gets the licensed privilege to do business from the franchisor or franchise provider.

6 Reasons why you should Buy a franchise

Here are six reasons you should buy a franchise over starting your own from scratch.

1. No advertising is needed

While opening a franchise, you don’t have to be worried about spending the budget on raising awareness in the market. The reason is that your parent company is already a well-known brand, meaning customers know what to expect so that they will come to you naturally.

That is not the case regarding the business you start on your own. There is no alternative to escape from the costs required for spreading awareness about the products or services your firm produces because no one of your customers has learned about them yet.

2. Easily gain funding

You, as said earlier, benefit from the tried and tested methods under the security blanket of a well-established brand name that can help you gain funding when you think of any significant improvements to your business.

3. Ongoing support

Once you become a franchisee of any particular brand, the franchiser becomes obligatory to protect and build its brand name. You will also be offered ongoing help and support to find new customers and retain existing ones.

4. Financial help

You could also gain financial assistance in getting your business off the ground, as many franchise providers tend to aid prospective franchisees with startup costs, equipment, and advertising.

5. You also benefit from being located in the prime spots of the high street. Franchisers have specifications of where they would like their franchises located and so choose said locations carefully to ensure the most significant amount of custom and usually can afford prime spots in high streets and shopping centres.

6. You are more likely to get funding from banks than if you were starting independently, as your parent company has a well-known brand name, increased security and reliability. You can get substantial amounts from banks to cover your startup costs.

Sarah Contreras

The author holds a bachelor's degree in Communication with expertise in certain fields like media and marketing. She currently works as a web content contributor for ANC Delivers, one of the fastest fleet home and corporate delivery services in Australia.