The franchising business model offers benefits both for franchisors and franchisees. For franchisors, franchisees help them establish their brand faster than they could by themselves or even with the help of investors or lenders. Hence, using the franchise fee and continuing royalties paid by franchisees, franchisors are able to expand the brand's reach at their own pace and convenience. Fees and royalties are utilized for funding operations at the corporate headquarters, where tasks such as franchisee training and support, marketing, quality assurance and overall brand management are based.
Franchisees also have a number of benefits to reap from the franchising business model. These include improved chances of success as opposed to sole proprietorship; relatively small preparation required; initial training and continuing support from corporate headquarters, including help in locating suitable sites; the opportunity to leverage on a popular brand; reduced costs via group purchasing; the use of a proven business model; effective advertising at varied levels; centralized lead generation and customer service; organized support among fellow franchisees through conferences, associations; and financial security aid. More info of this are discussed in the link.
In this business mode, the success of a franchisee is almost guaranteed as long as the system established by the franchise is consistently followed. Franchisees are literally paying for the franchisor's business system in the belief that this will raise their chances of success. Franchisors open themselves to proposals or suggestions for improvements from franchisees, but it is prohibited for any franchisee to divert from the system without the approval the franchisor. Go here to know more of this. Violating this rule constitutes a violation of the entire franchise agreement, and this can strip the franchisee of his right to use the franchisor's brand.
Franchisees are also required to treat with highest confidentiality all matters related to the franchised business, and to sign a non-compete agreement. For anyone considering franchising, the first step is to determine if this business setup is indeed right for them.
There are businessmen who want complete independence in running their business affairs, while others are happy to exchange ideas with others and work collectively to attain success. It is basic that for a franchise partnership to prosper, the franchisor must not only agree to the effectiveness of the franchise model, but must also embrace the philosophies that guide the franchisor in his business. More of this are disclosed at http://www.huffingtonpost.com/john-tarnoff/franchise-business-success-lessons_b_6600626.html. Finally, long-term success as a franchisee is mainly dependent on how consistent a franchisee's business objectives are with those of the franchisor. If there is conflict, failure becomes an inevitable consequence.