Virtually every type of business operated today is available as a franchise. This includes fast-food operations, real estate agencies, quick-copy shops, pet sitting services, and retail establishments.
In a franchise arrangement, the parent company provides the franchise buyer with a well-known business name, training, an operating plan, and marketing and advertising support (Marini, 1993, p. 255). In a smaller franchise, most of the initial start-up work is done by the buyer. Then, as the business grows, hiring a staff may be economically feasible. The franchisors usually provide hiring and management support. Some franchisors also provide financing or help in obtaining venture capital.
In exchange for these services, the buyer pays a one-time fee for the right to do business under the franchisor's name, plus an ongoing royalty, usually five to eight percent of gross sales. As a franchisee, the buyer agrees to follow the prescribed business plan.
While the larger, more established franchises cost hundreds of thousands of dollars to buy, many franchises have much lower costs. For example, on the low-end, Kinderdance, a dance and gymnastics business for children, costs only $3,000 (Marini, 1993, p. 255). Other franchises, such as Postal Instant Press (PIP) may cost over $90,000 or more. Franchising is often attractive to women. This is because some of them can be run from the home or on a part-time basis.
Regardless of the cost of the franchise, and even with the support of a reputable parent company, it takes hard work and perseverance to be successful (Marini, 1993, p. 255). Moreover, unscrupulous franchisors sometimes take advantage of unsuspecting investors. Some businesses look great on paper, but investors should assess their own abilities and constraints before buying a franchise. It is important to find a business that is suitable for the time, talent, and effort that will be needed to operate i...