Franchise Your Business

What Is a Franchise?

A franchise is a type of license that grants a franchisee access to a franchisor’s proprietary business knowledge, processes, and trademarks, thus allowing the franchisee to sell a product or service under the franchisor’s business name. In exchange for acquiring a franchise, the franchisee usually pays the franchisor an initial start-up fee and annual licensing fees.


  • A franchise is a business whereby the owner licenses its operations—along with its products, branding, and knowledge—in exchange for a franchise fee.
  • The franchisor is the business that grants licenses to franchisees.
  • The Franchise Rule requires franchisors to disclose key operating information to prospective franchisees.
  • Ongoing royalties paid to franchisors vary by industry and can range between 4.6% and 12.5%.2International Franchise Association. “Royalty Fee Requirement Definitions.”

Understanding Franchises

When a business wants to increase its market share or geographical reach at a low cost, it may franchise its product and brand name. A franchise is a joint venture between a franchisor and a franchisee. The franchisor is the original business. It sells the right to use its name and idea. The franchisee buys this right to sell the franchisor’s goods or services under an existing business model and trademark.

Franchises are a popular way for entrepreneurs to start a business, especially when entering a highly competitive industry such as fast food. One big advantage to purchasing a franchise is you have access to an established company’s brand name. You won’t need to spend resources getting your name and product out to customers.

The franchise business model has a storied history in the United States. The concept dates to the mid-19th century when two companies—the McCormick Harvesting Machine Company and the I.M. Singer Company—developed organizational, marketing, and distribution systems recognized as the forerunners to franchising. These novel business structures were developed in response to high-volume production and allowed McCormick and Singer to sell their reapers and sewing machines to an expanding domestic market.

Important: Before buying into a franchise, investors should carefully read the Franchise Disclosure Document, which franchisors are required to provide. This document contains information about franchise fees, expenses, performance expectations, and other key operating details.

The earliest food and hospitality franchises were developed in the 1920s and 1930s. A&W Root Beer launched franchise operations in 1925. Howard Johnson Restaurants opened its first outlet in 1935, expanding rapidly and paving the way for the restaurant chains and franchises that define the American fast-food industry until this day.

There were 790,492 franchise establishments in 2022 that supported the U.S. economy, with an expected 805,436 for 2023. These franchises contributed over $500 billion to the economy. In the food sector, franchises included recognizable brands such as McDonald’s, Taco Bell, Dairy Queen, Denny’s, Jimmy John’s, and Dunkin’. Other popular franchises include Hampton by Hilton and Days Inn, as well as 7-Eleven and Anytime Fitness.

Franchise Basics and Regulations

Franchise contracts are complex and vary for each franchisor. Typically, a franchise agreement includes three categories of payment to the franchisor. First, the franchisee must purchase the controlled rights, or trademark, from the franchisor in the form of an upfront fee. Second, the franchisor often receives payment for providing training, equipment, or business advisory services. Finally, the franchisor receives ongoing royalties or a percentage of the operation’s sales.

A franchise contract is temporary, akin to a lease or rental of a business. It does not signify business ownership by the franchisee. Depending on the contract, franchise agreements typically last between five and 30 years, with serious penalties if a franchisee violates or prematurely terminates the contract.

In the U.S., franchises are regulated at the state level; however, the Federal Trade Commission (FTC) established one federal regulation in 1979. The Franchise Rule is a legal disclosure a franchisor must give to prospective buyers. The franchisor must fully disclose any risks, benefits, or limits to a franchise investment.

This information covers fees and expenses, litigation history, approved business vendors or suppliers, estimated financial performance expectations, and other key details. This disclosure requirement was previously known as the Uniform Franchise Offering Circular before it was renamed the Franchise Disclosure Document in 2007.

Advantages and Disadvantages of Franchises


There are many advantages to investing in a franchise, and also drawbacks. Widely recognized benefits include a ready-made business formula to follow. A franchise comes with market-tested products and services, and in many cases established brand recognition.

If you’re a McDonald’s franchisee, decisions about what products to sell, how to layout your store, or even how to design your employee uniforms have already been made. Some franchisors offer training and financial planning, or lists of approved suppliers. But while franchises come with a formula and track record, success is never guaranteed.


Disadvantages include heavy start-up costs as well as ongoing royalty costs. To take the McDonald’s example further, the estimated total amount of money it costs to start a McDonald’s franchise ranges from $1.3 million to $2.3 million, on top of needing liquid capital of $500,000.

By definition, franchises have ongoing fees that must be paid to the franchisor in the form of a percentage of sales or revenue. This percentage can range between 4.6% and 12.5%, depending on the industry.

For uprising brands, there are those who publicize inaccurate information and boast about ratings, rankings, and awards that are not required to be proven. So, franchisees might pay high dollar amounts for no or low franchise value.

Franchisees also lack control over territory or creativity with their business. Financing from the franchisor or elsewhere may be difficult to come by. Other factors that impact all businesses, such as poor location or management, are also possibilities.


  • Ready-made business formula
  • Market-tested products and services
  • Established brand recognition
  • Large decisions already made
  • List of approved suppliers
  • Training and financial planning provided


  • Success not guaranteed
  • Large start-up costs
  • Ongoing fees
  • Lack of territory choice
  • Lack of creative control

Franchise vs. Startup

If you don’t want to run a business based on someone else’s idea, you can start your own. But starting your own company is risky, though it offers rewards both monetary and personal. When you start your own business, you’re on your own. Much is unknown. “Will my product sell?”, “Will customers like what I have to offer?”, “Will I make enough money to survive?”

The failure rate for new businesses is high. Two-thirds of businesses survive just two years, and 50% survive just five years. If your business is going to beat the odds, you alone can make that happen.

To turn your dream into reality, expect to work long and hard hours with no support or expert training. If you venture out solo with little or no experience, the deck is stacked against you. If this sounds like too big a burden, the franchise route may be a wiser choice.

People typically purchase a franchise because they see other franchisees’ success stories. Franchises offer careful entrepreneurs a stable, tested model for running a successful business. On the other hand, for entrepreneurs with a big idea and a solid understanding of how to run a business, launching your own startup presents an opportunity for personal and financial freedom. Deciding which model is right for you is a choice only you can make.

What Are the Advantages of Franchises?

Some of the widely recognized advantages of franchises include a ready-made business formula to follow, market-tested products and services, and, in many cases, established brand recognition. For example, if you’re a McDonald’s franchisee, decisions about what products to sell, how to layout your store, or even how to design your employee uniforms have already been made. Some franchisors offer training and financial planning, or lists of approved suppliers; however, despite these benefits, success is never guaranteed.

What Are the Risks of Franchises?

Disadvantages include heavy start-up costs as well as ongoing royalty costs. By definition, franchises have ongoing fees that must be paid to the franchisor in the form of a percentage of sales or revenue. This percentage can range between 4.6% and 12.5%, depending on the industry.2

There is also the risk of a franchisee being duped by inaccurate information and paying high dollar amounts for no or low franchise value. Franchisees also lack control over territory or creativity with their business. Financing from the franchisor or elsewhere may be difficult to come by and franchisees could be adversely affected by poor location or management.

How Does the Franchisor Make Money?

Typically, a franchise agreement includes three categories of payment to the franchisor. First, the franchisee must purchase the controlled rights, or trademark, from the franchisor in the form of an upfront fee. Second, the franchisor often receives payment for providing training, equipment, or business advisory services. Finally, the franchisor receives ongoing royalties or a percentage of the operation’s sales.

The Bottom Line

A franchise can be a great way for an individual to enter the world of entrepreneurship, as the majority of the groundwork has already been laid and you are leveraging off an established, successful, and well-known business and brand name. There are also many businesses with franchises to choose from.

For a fee and start-up costs, you can be on your way to being your own boss and entering a possibly lucrative career. Though it must be noted that success is not guaranteed and franchises require a lot of work to be profitable.

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Franchising As A Business Expansion Strategy

For anyone considering expansion of business in the most suitable and affordable manner, establishing a franchising business model is a brisk approach to build a predictable and sustainable business in contrast to expanding corporate business locations.

Startup Business Bureau is geared up to become your success partner for developing whole Franchise business strategy to create business brand identity, raising capital in terms of franchise fee, offering an unparalleled franchise operational and management support for optimum growth, profitability, and risk management.

Startup Business Bureau is your premier destination for franchise consulting services. We are a team of experienced professionals dedicated to helping businesses expand through franchising. With our comprehensive expertise and proven strategies, we provide customized solutions to guide you through every step of the franchising process.


Franchising offers an incredible opportunity to scale your business, reach new markets, and leverage the entrepreneurial spirit of aspiring franchisees. However, navigating the complexities of franchising requires specialized knowledge and careful planning. That’s where we come in.

How to Franchise Your Business?

Franchise development refers to the process of expanding a business by establishing a network of independently owned and operated outlets, known as franchises. Franchising is a popular business model that allows a company (the franchisor) to grant the rights to its brand, products, and business systems to individuals or companies (the franchisees) who are interested in operating their own businesses.

Here’s a general overview of how franchise development works:

1. Concept Development:

The franchisor develops a successful and replicable business concept that has proven market demand. This concept should be unique and provide a competitive advantage in the industry.

2. Legal and Financial Preparation:

The franchisor engages legal and financial experts to create the necessary legal documents, such as the franchise agreement, disclosure documents, and operations manuals. They also determine the financial requirements, such as initial franchise fees, ongoing royalties, and marketing contributions.

3. Franchise Package Creation:

The franchisor creates a comprehensive franchise package that includes all the necessary information and resources for potential franchisees. This package typically includes details about the business model, brand standards, training programs, marketing support, and ongoing operational support.

4. Franchisee Recruitment:

The franchisor actively seeks potential franchisees through various channels, including advertising, franchise expos, and business networks. They may also use franchise brokers or consultants to assist with the recruitment process. Interested individuals or companies submit applications and undergo a selection process, which may include interviews, background checks, and financial assessments.

5. Franchise Training:

Once the franchisees are selected, the franchisor provides them with initial training on how to operate the business successfully. This training covers various aspects, such as the brand’s standards, operations, sales techniques, inventory management, and customer service.

6. Opening Support:

The franchisor assists the franchisees in finding suitable locations, negotiating leases, and setting up their businesses. They may provide guidance on store layout, design, and marketing strategies to ensure consistency with the brand image.

7. Ongoing Support:

Franchisees receive ongoing support from the franchisor, which may include operational guidance, marketing materials, supply chain management, and regular communication. The franchisor often conducts quality assessments and may offer additional training and resources to help franchisees maintain brand standards and achieve profitability.

8. Franchise Network Expansion:

As the franchise network grows and matures, the franchisor may continue to develop new products or services, refine operational processes, and explore opportunities for expansion into new territories. This ongoing development ensures the long-term success of the franchise system.

It’s important to note that franchise development can vary depending on the specific industry, business model, and the goals of the franchisor. Franchise agreements and regulations may also vary between countries or regions, so it’s crucial for both franchisors and franchisees to understand and comply with the legal requirements in their respective jurisdictions.

Our Franchise Consulting Services:

1. Franchise Feasibility Assessment:

We start by conducting a thorough evaluation of your business to determine its franchise potential. Our experts analyze key factors such as market demand, scalability, profitability, and operational readiness. Through this assessment, we provide valuable insights into the feasibility and viability of franchising your business.

2. Franchise Development Strategy:

Once we establish that franchising is a viable option for your business, we collaborate with you to develop a comprehensive franchise development strategy. We define your target franchisee profile, create franchise packages, outline territories, and establish franchise fees and royalties. Our goal is to design a strategy that aligns with your business goals and maximizes franchise success.

3. Franchise Operations Documentation:

Our team assists you in creating the necessary documentation for franchising your business. This includes developing the Franchise Disclosure Document (FDD), franchise agreements, operations manuals, training programs, marketing materials, and other essential franchise documents. We ensure that your franchise materials are legally compliant, professionally structured, and reflect your brand identity.

4. Franchise Marketing and Branding:

Successful franchise expansion requires effective marketing and branding strategies. We help you develop a compelling franchise brand identity, including logos, slogans, and marketing collateral. Our team also assists in creating targeted marketing campaigns, online presence optimization, and lead generation strategies to attract qualified franchisees.

5. Franchisee Recruitment and Training:

We support you in finding and selecting the right franchisees for your business. Our consultants help develop franchisee recruitment processes, screening criteria, and interview protocols. Additionally, we provide guidance on franchisee training programs, ensuring that new franchisees are equipped with the necessary skills to operate successfully.

6. Ongoing Franchise Support:

We believe in long-term partnerships with our clients. Our consultants offer ongoing support to franchisors, including assistance with franchisee relationships, performance monitoring, operational improvements, and system-wide training updates. We strive to help you maintain a thriving franchise network while continuously enhancing your brand value.

Franchise Sales Management

Franchise sales management refers to the process of overseeing and managing the sales activities and strategies related to the sale of franchise opportunities. It involves attracting, qualifying, and ultimately closing deals with potential franchisees. Effective franchise sales management is crucial for the growth and success of a franchisor’s business. Here are some key aspects of franchise sales management:

1. Lead Generation:

Franchise sales management begins with generating leads of potential franchisees. This can be done through various channels, such as advertising campaigns, online marketing, trade shows, referrals, and partnerships. The goal is to attract individuals or companies who are interested in becoming franchisees.

4. Franchise Discovery Process:

The franchise sales team guides potential franchisees through the franchise discovery process. This involves providing them with comprehensive information about the franchise, including financial projections, operational details, training and support programs, and the franchise agreement. The goal is to help potential franchisees make an informed decision.

7. Reporting and Performance Tracking:

Franchise sales management involves tracking and analyzing sales performance metrics to evaluate the effectiveness of sales strategies and initiatives. This includes monitoring lead conversion rates, sales pipelines, revenue projections, and other key performance indicators. Regular reporting helps identify areas for improvement and refine sales strategies.

2. Qualification and Screening:

Once leads are generated, the franchise sales team qualifies and screens them to determine their suitability as franchisees. This process typically involves assessing the candidate's financial capabilities, business experience, motivation, and alignment with the franchisor's values and requirements.

5. Negotiation and Closing:

Once a potential franchisee expresses serious interest, the franchise sales team engages in negotiation and deal structuring. This includes discussing financial terms, initial franchise fees, ongoing royalties, marketing contributions, and other contractual elements. The goal is to reach a mutually beneficial agreement that satisfies both parties. Once the terms are agreed upon, the sale is closed, and the franchise agreement is signed.

8. Continuous Sales Training and Development:

Franchise sales management requires ongoing training and development of the sales team to ensure they have the necessary skills and knowledge to effectively sell franchise opportunities. This includes staying updated on industry trends, competition analysis, and sales techniques.

3. Initial Contact and Relationship Building:

The franchise sales team establishes initial contact with qualified leads. This is often done through phone calls, emails, or in-person meetings. The purpose is to provide information about the franchise opportunity, answer questions, and build a relationship based on trust and mutual understanding.

6. Transition to Operations:

After the sale is closed, the franchise sales team works closely with the franchise operations team to facilitate a smooth transition for the new franchisee. They ensure that the necessary training and support are provided to help the franchisee prepare for the opening of their business.

Effective franchise sales management requires a combination of sales expertise, industry knowledge, strong communication skills, and a deep understanding of the franchise concept and its value proposition. It is a dynamic and iterative process that focuses on attracting the right franchisees who have the potential to succeed within the franchisor’s system.

Why Choose Us for Your Franchise Management?

1. Experience and Expertise:
Our team consists of franchise consultants with years of industry experience. We have a deep understanding of franchise development, operations, and marketing strategies across various sectors. You can trust our expertise to guide you through the franchising journey.
2. Tailored Solutions:
We recognize that each business is unique. Our consulting services are customized to fit your specific goals, industry dynamics, and brand identity. We take the time to understand your business thoroughly, ensuring that our recommendations align with your vision and objectives.
3. Proven Track Record:
We have a track record of successfully assisting businesses in franchising their operations. Our clients have achieved remarkable growth and profitability through our strategic guidance and support. We are committed to helping you achieve similar success.
4. Comprehensive Support:
We offer end-to-end consulting services, providing support at every stage of the franchising process. From initial feasibility assessment to franchisee recruitment and ongoing support, we are your trusted partner in franchise expansion.
5. Ethical Practices:
We prioritize ethical business practices, professionalism, and integrity in all our operations. We maintain confidentiality, adhere to legal standards, and uphold the highest level of transparency and honesty.

Ready to take your business to new heights through franchising?

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