Franchising Explained

  • Added:
    Nov 22, 2012
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One of three business strategies that businesses can use to get a market share is called franchising. This is a specific business strategy to get and keep your customers. It is a way to market your products and services so that your customers can visualize how they will benefit from purchasing from you. Franchising involves a network of business relationships which are interdependent, allowing a number of people to share in things such as brand identification, a proven marketing and distribution system and a successful method of running a business.

Franchising means that groups of people with the same goals and responsibilities in relation to dominating the markets form an alliance. The relationship of a franchise is a business relationship which is a joint commitment by all of the members, or franchisees. Their main goal is to get more customers than anyone else in the same type of business.

Many people don’t truly understand what a franchise is. The biggest misconception is that when you are a franchisee you are buying a franchise. Actually, it is an investment you are making into a system to use the operating system, brand name and ongoing support. Everyone involved in the same system are licensed to use it and the brand name.

If you want to be successful in your franchise, you must understand all aspects of the business itself and also the legal aspects of your relationship with the other franchisees and the franchise owner. You must be focused on working with the franchisees and company managers so you can successfully market your brand. If you acquire an ownership mentality, it will ruin your success. Working together with the other people in your business circle is where your success lies. They can help you with your shared responsibilities of operating the business and experienced franchisees can give you advice you need when you are just starting out.

Other reasons to avoid the ownership mentality are because if you think you bought the franchise, and begin thinking like an owner instead of a franchisee, you’ll start to act that way as well. You’ll want to change the system according to your needs and wonder what you are paying royalties for. Plus, you will see the other franchisees as your competitors instead of your team mates.

You own the assets of your company when you are a franchisee, but remember, you are still licensed to run another person’s proven business system. 

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