Franchises

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 wit

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f distribution. Franchising allows the owner to be part of a larger company, while also giving economies of scale for purchases, advertising, and distribution. In addition, investors and business people are seeking proven, efficient business models like franchising to develop in response to the more competitive local environment. U.S. franchisees can benefit from the European market by exporting their goods through local representatives. Agents and distributors who are present in the market are best able to respond to customer demands nationwide, to assist exporters with European customs, to house inventories, to inform exporters of market trends, and to provide aftersales services. Regardless of whether the franchise is in the United States or in Europe, or will encompass the domestic or European market, in choosing a franchise, the investor should also be aware that not only is he buying a business, he is also buying a place in a community. Franchises have often become household words. For example, everyone knows such franchises as McDonald's, Burger King, and to some extent PIP. A franchise such as McDonald's prides itself on being part of the community. Its franchisee's have often been minority investors that have loc

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