1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

Franchise

By

Definition:

The business practice of taking another organization’s business model, products and/or services and trade name, and reproducing it in a different location. The franchisor (or already established entity) is the lead business, which is willing to enter into a contractual relationship with the franchisee (individual or group seeking to set up the identical business). Within this contract, the franchisor gives permission to the franchisee to utilize its trademarked name and provides set-up and ongoing training and support services. In return, the franchisee pays a start-up fee and other expenses and is given a direct stake in the profits and losses of the business.

The costs to purchase a franchise can very widely, and is typically based off the brand’s recognition, what percentage of the market is already served by the franchise and what the typical revenue is for a franchise location. For example, to open a McDonald’s franchise, you could expect to pay start up costs of up to $1,842,700. But to open a Vanguard Cleaning Systems commercial cleaning business, you are looking at costs of up to $38,100.

There are franchises focused on both the B2C and B2B markets, with the greatest concentration focused within the services markets. Listed here are a few well-known franchises:

  • Subway
  • McDonald’s
  • Hampton Inn
  • Dunkin Donuts
  • H&R Block
  • Great Clips
Examples:
I have been toying with the idea of starting a home business and have decided to buy a franchise.

©2014 About.com. All rights reserved.