May 2, 2013
How Franchising Came To Be
Franchising had its boom in the United States post WWII, but the foundations for it date back much earlier. One of the earliest successful American franchises to take off was John S. Pemberton’s Coca-Cola. His promising venture attracted salesmen with business acumen and operated under the Coca-Cola name, helping it skyrocket to success much faster than Pemberton could have done so on his own. Following this example, more and more franchises began to emerge in the 1940’s and 50’s in suburban communities, forming the strips we see today with lines of franchises along highways and in shopping centers.
Forms of Franchising
There are 4 known franchise types
- business format franchises
- product franchises
- manufacturing franchises
- business opportunity ventures
The most common types are business format franchises. In this form, companies offer an established business and use of its trademark to a franchisee and assist in the initial launch and running of the business and are sold supplies from their franchisor. In return, business owners pay fees and royalties for operating under the brand name. Product franchises control the distribution of their product and the franchisor is simply a vendor for the product in question. To be able to disperse the goods, franchisees must purchase a minimum volume from the franchisor to meet sales goals. Manufacturing franchises essentially take the company name and produce the goods for the franchisor, and then distribute them. Manufacturing franchises focus on the assembly of the good. And finally, business opportunity ventures accept trade secrets, client lists, and accounts in exchange for a fee.
The Franchise Advantage
Franchising brings success to both the franchisor and franchisee. Through franchising, a company can grow at a more rapid pace because the usual bars to expansion and significantly reduced. Business owners are stunted by facing a lack of labor and capital to bring to the venture, but as franchisors, they can obtain both from the franchisees that they hire to contribute to the initial investment. So in this way, the burden on the franchisor is lessened. For the franchisee, much less risk is involved when opening a business for an already established company as opposed to doing it all from scratch. The franchisee is assisted with start-up, training, and easy access to supplies at discounted prices. Additionally, the franchisee can have access to an available client base, marketing information and strategies, and brand loyalty simply from being associated with the company.
Franchising is a profitable venture with a high probability of success for both parties. Franchising with Image One also takes care of all forms of paperwork for you so you can focus your attention on the actual work and provides insurance so that you are covered. Image One prides in providing the best tools available in the industry to make our franchisees successful. If you are interested in becoming a franchisee, give us a call at 630.616.1010. For more information on franchises and to see the original article, click the link here: http://www.referenceforbusiness.com/encyclopedia/For-Gol/Franchising.html
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