(a) what is meant by a franchisor business plan explain

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What Is Franchisor?

Understanding franchisor, franchisor advantages, franchisor disadvantages.

• Franchisor Example: Dunkin' Donuts

What Franchises Make the Most Money?

What are among the least expensive franchises.

• Types of Corporations

What is a Franchisor? Definition, Pros, Cons, and Example

A franchisor sells the right to open stores and sell products or services using its brand, expertise, and intellectual property . It is the original or existing business that sells the right to use its name and idea. The small business owner who purchases these rights is called a franchisee and the branch business, itself, is called a franchise .

Key Takeaways

• A franchisor sells the right to open stores and sell products or services using its brand, expertise, and intellectual property. 
• A corporation often will use franchising as a way to expand its global presence because it enables them as franchisors to benefit from the local knowledge of their franchisees.
• At a minimum, a franchisor should plan to spend on business development, a flagship store, legal document preparation, marketing, and packaging plans, and recruiting and training franchisees.
• Franchises are regulated by state and federal laws that require a Franchise Disclosure Document (FDD) and other regulatory documents entailing an attorney's services.
• Generally speaking, a franchise agreement usually won't protect franchisees if their franchisor declares bankruptcy.

The franchisor company generally receives an initial start-up fee, an annual fee, and a percentage of the branch’s profits. It may also charge for other services. Well-known corporate franchisors include Hertz ( HTZ ), Marriott International ( MAR ), McDonald's ( MCD ), and Subway ( privately held ).

Becoming a franchisor is generally a good business alternative, especially for large, already successful companies, though there are both advantages and disadvantages.

The relationship between a franchisee and franchisor is inherently one of advisee and advisor. The franchisor provides continual guidance and support concerning general business strategies such as hiring and training staff, setting up shop, advertising its products or services, sourcing its supply, and so on.

The franchisor's advisory role is not free, however; it is part of the entire package that the franchisee purchases. Even when the relationship is solidified, and the two have been working together successfully, the franchisor still acts as a mentor. A franchisor's parental role is an ongoing commitment. In fact, franchisors generally police their franchises constantly—albeit some more than others—to ensure that they are maintaining the parent company's standards, product quality, and brand values.

Some of the more common types of stores that franchisors can offer franchisees are:

• Freestanding store: A retail location or restaurant, either newly constructed or an existing structure that does not share any common walls with a third party
• Shopping center storefront: A retail location or restaurant that shares a common wall, or walls, with third parties
• Gas/convenience restaurants: A gas station, often with a convenience store and restaurant that is a sub- or-shared tenancy within a gas/ convenience host environment
• Special distribution opportunity (SDO): Cart or kiosk locations that are referred to as special distribution opportunities and may be located within another host establishment, such as a stadium or another retail facility
• Online or e-commerce: Licensed branding to an online or e-commerce platform

A chain store is one of a series of stores owned by one company; if Starbucks ( SBUX ), for example, were to franchise some of its stores, then those would be owned by outside investors—not by the original company—and Starbucks would become a franchisor .

Generally speaking, a franchise agreement won't protect franchisees if their franchisor declares bankruptcy. In fact, franchisees are usually obligated to pay royalties and continue operating amid a franchisor's bankruptcy. When a franchisor files for bankruptcy, the court will immediately impose a stay of all actions against the franchisor. In other words, franchisees aren't allowed to take legal action against the franchisor.

The following steps in the process are determined by the type of bankruptcy the franchisor chooses to file for.

• In a Chapter 7 bankruptcy , all of the franchisor's assets are liquidated to pay its creditors. Companies typically go this route because it's flat going out of business. In this situation, it's highly unlikely that the franchisor will be able to meet its franchise agreement obligations. Therefore, it's also unlikely that the franchisee will be able to stay in business.
• In a Chapter 11 bankruptcy , a franchisor reorganizes its debt obligations and continues to operate as a going concern. Under this type of bankruptcy, the franchisor works with its creditors to create a reorganization plan while continuing to meet at least some of its franchise contract obligations. A reorganization plan sometimes takes months or years to complete.

In either case, a franchisor's bankruptcy will likely have a significant impact on its franchisees.

• Expansion Opportunities : A corporation often will use franchising as a way to expand its global presence because it enables them as franchisors to benefit from the local knowledge of its franchisees. The franchisor company grants the franchisee the responsibility of expanding in an area or country and grants them the right to sub-franchise. In exchange, the franchisee assumes the financial burden of building a unit and pays the franchisor royalties for access to its time-tested business model, market power, and brand name.
• Heightened Market Share : In addition to extending its geographical reach, franchising is a good way for a company to increase its market share while minimizing capital expenditures (CapEx) . Franchises can be more profitable than corporate-owned chains, because as business owners franchisees are motivated to maximize their outlets' profitability and are responsible for their own overhead, such as staff. Less overhead can make franchises more profitable than corporations, even when their outlets are less profitable than they would be if they were run as chain stores.
• Scalability : Depending on a franchisor's needs, resources, and production goals, the company can customize its franchise agreement to focus on large-volume national growth or low-volume regional growth.
• Additional Sources of Revenue : A franchisor receives additional income in the form of ongoing royalties paid by its franchisees. Royalties typically include a startup fee, a monthly fee that includes a percentage of the franchisee's gross sales, and may contain other payments depending on the franchise agreement.

Royalties paid to franchisors vary by industry, location, company size, and financial strength. That said, royalties paid to franchisors usually fall in the range of between 4.6% and 12.5%.

Some may think—partly because of the steep cash outlay—that franchisees assume more risk than franchisors. But there are potential disadvantages for franchisors, too.

• Capital Investment : Establishing a franchise requires a large investment of both time and money. At a minimum, a franchisor should plan to spend on business development, a flagship store, legal document preparation, marketing, and packaging plans, and recruiting and training franchisees.
• Franchise Failure : Even with scrupulous vetting on the part of the franchisor, a franchisee could turn out to be a poor choice—irresponsible, difficult to work with, or incapable of running a business for whatever reason. Or the franchise could become unprofitable for other reasons. Even with a proven business plan, there is no guarantee that a franchise will succeed.
• Less Control : At the outset, franchisees will, of course, agree to follow their franchisors' training, deportment, and other instructions. But after the honeymoon is over, that might not be the reality. Franchisees are human beings with their own ideas and temperaments, so disagreements can always occur: a franchisee could become stubborn or difficult, or might not be able to effect changes as easily as the franchisor had hoped.
• Costly Legal and Regulatory Fees : In the event that a franchisee refuses to cooperate, or proves to be a poor choice in other ways, legal action may be necessary; this can be both expensive as well as damaging to a franchisor's reputation among other franchisees. Moreover, franchises are regulated by state and federal laws that require a Franchise Disclosure Document (FDD) and other regulatory documents entailing an attorney's services.

Franchisor Example: Dunkin' Donuts

Dunkin’ Brands Group (DNKN) went private after it was bought out by Inspire Brands Inc. in late 2020. It used to be called Dunkin' Donuts , began operations in 1954, and has been franchising since 1955.

With more than 130 years of franchising experience, Dunkin' is home to two of the world's most recognized franchises: Dunkin' and Baskin-Robbins. According to Inspire Brands Inc.'s website, there are "11,300 Dunkin' restaurants worldwide – that's over 8,500 restaurants in 41 states across the U.S.A. and over 3,200 international restaurants across 36 countries." As a franchisor, Dunkin’ licenses stores and restaurants that sell Dunkin’ coffee, donuts, bagels, muffins, compatible bakery products, sandwiches, and other food items and beverages compatible with the franchisor’s concept.

Most companies that offer franchising opportunities post how-to information for prospective franchisees on their websites. Generally, this is comprehensive, voluminous, and often written in legalese or boilerplate . In its franchisor role, Dunkin's text speaks to its would-be franchisees clearly and understandably, as the following sample shows.

Training Overview

• Franchisees must at all times manage their network with at least two individuals, one of whom must be the franchisee or another partner, shareholder, or a designated representative. But both must successfully complete the required training program.
• It takes a minimum of 20 days to complete the classroom/instructional phases of the Dunkin’ Core Initial Training program—not including online training, in-restaurant practice, or travel time; this is offered a minimum of 25 times a year at Dunkin’ Brands University in Braintree, Massachusetts.
• The classroom and in-restaurant time are based on 10-hour days. Some of the franchisor’s required classes are only offered on the internet and are referred to as online training. These classes will require approximately 65 hours to complete.

Obligations and Restrictions

• Franchisees must devote continuous best efforts to the development, management, and operation of their business. This means devoting sufficient time and resources to ensure full and complete compliance with their obligations to the franchisor, their customers, and to others.
• Franchisees may not conduct any other business or activity at the restaurant without the franchisor’s prior written approval. They may sell only products approved by the franchisor and they must offer for sale the full menu prescribed by the franchisor.
• Franchisees are not permitted to sell or distribute goods or services via the Internet or other electronic communications.

Financial Assistance

Dunkin' typically does not offer to finance its franchisees. However, from time to time, it may, at its discretion, offer voluntary financing to existing franchisees for specific programs such as the purchase of specialized equipment or accelerated development in specified markets. The franchisor may facilitate certain third-party lending arrangements that may provide financing for qualified franchisees. The amount of financing and repayment period varies by program, circumstances, and creditworthiness of the applicant.

Estimated Initial Investment

Dunkin' estimates that the cost to open one of its franchises—not including real estate costs—is approximately $95,700 at the low end and $1,597,200 at the high end. More information, including a complete breakdown of the fee schedule, can be found on the franchisee page of their website .

Here are five of the biggest money-making franchises, and the initial investment required:

• McDonald's ($1M-$2.2M): Iconic symbol of fast-food hamburgers, fries, chicken nuggets, breakfast sandwiches, and a wide variety of other signature food items. Operates more than 36,000 restaurants in more than 100 countries. Founded in 1954.
• Dunkin' ($96K-$1.6M): World's leading baked goods and coffee chain, serving more than 3 million customers each day. Offers more than 50 varieties of donuts. Founded in 1950.
• Sonic Drive-In ($1.2M-$3.5M): Currently owns and operates the largest chain of drive-in restaurants. They are primarily located in the south-central and southeastern United States. Founded in 1990.
• 7-Eleven ($38K-$1.1M): Operators of more than 60,000 convenience stores, mainly in North America and Asia. Founded in 1927.
• Popeyes ($383K-$2.6M): One of the world's largest quick-serve chicken restaurants, operating more than 2,700 restaurants in the United States and around the world.

Here are five lower-cost opportunities with strong brand power, and the initial investment required:

• Kumon Math & Reading Centers: $64K-$140K
• ServiceMaster: $77K-$275K
• uBreakiFix: $98K-$303K
• Jan-Pro: $4K-$56K
• Cruise Planners: $2K-$24K

International Franchise Association. " Royalty Fee Requirement Definitions ," Page 1. Accessed June 4, 2021.

Dunkin'. "Dunkin'|About Us." Accessed Aug. 28, 2021

Hubspot. " The 39 Best Franchise Opportunities to Buy & Own in 2020 ." Accessed June 3, 2021.

McDonald's. " About Us ." Accessed June 4, 2021.

Dunkin'. " About Us ." Accessed June 4, 2021.

Sonic. " The Sonic Franchise Story ." Accessed June 4, 2021.

Britannica. " 7-Eleven ." Accessed June 4, 2021.

Popeyes. " About Popeyes Louisiana Chicken ." Accessed June 4, 2021.

Entrepreneur. " 2021 Franchise 500 Ranking ." Accessed June 3, 2021.

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The 7 Key Elements Of An Effective Franchise Business Plan

• Adam Goldman
• May 12, 2020

Whether you are purchasing a franchise business or expanding your current one, finances will always play a major role. To secure financing from lenders, it is necessary to prepare a franchise business plan .

However, it’s essential to have a solid understanding of the seven key elements in order to create effective franchise business plans.

A franchise business plan is not only a written document that narrates the core details of your independent business but also has a list of your objectives. It also includes the operations, the marketing strategy for growing your business, as well as the financial projections, including franchise fees. It’s crucial to address any pending request, ensuring a smooth and transparent process in the development and execution of your franchise strategy in your business plan.

For you to learn more, this post will discuss each of the seven elements needed when writing franchise business plans. So even without a business degree, you can write a convincing one.

Next Section, let’s get started by knowing these 7 franchise business plan elements.

What are the 7 Elements of a Successful Franchise Business Plan

After signing the franchise agreement , your franchisor will give you the marketing plan and other start-up information . The materials provided to you can help you start writing your franchise business plan outline. In many cases, franchisors will guide their franchisees in the writing process.

Next section, when you create a concise franchise business plan template could lead to getting a financial source to start a franchise or grow your existing franchise. So, let’s begin by knowing the elements you’ll need.

Ready to Be Your Own Boss?

1. franchise business plan: executive summary.

• Which service, product, or need, does your business serve?
• Is your business unique?
• How will you ensure your company’s success?
• Is your personal savings enough to invest a business?
• What skills do you possess that will help the business excel?

The first part of your franchise business plan outline is the overview or summary of the essential information you are providing in your new franchise business or current one.

As it will explain your business, the executive summary section should answer the following questions about your franchises:

Business plans’ executive summary is the readers’ first impression of your franchises. It is a written version of your business pitch. It should clearly define your franchises and everything it has to offer in a way that distinguishes your concept.

The executive summary should read as a separate document to introduce your business plan template. It should only reference material that you’ve provided and use appropriate language for your target audience.

2. Franchise Business Plan: Business Description

The business description section of the franchise business plan template summarizes your business. This section should contain your:

• company’s structure,
• mission statement,
• and future projections.

While you don’t need to provide detailed financial data, you should include an overview of your industry, financial projections, personal savings, tax returns, and relevant business facts in your business plan.

Next section, you should include company goals in the business description of your franchise business plan. The business description is your opportunity to share short and long-term objectives for your business with your reader.

Make sure your business goals are reasonable and quantifiable . Learn from other franchisees, and avoid ambiguous terms on your franchise business plan template. Use specific language and time frames to precisely explain what you plan to achieve.

3 . Franchise Business Plan: Competitive Analysis

A competitive analysis section is also included in any franchise business plans. It involves determining your competitors, both direct and indirect, and your deep research will help you understand your weaknesses and strengths vs. them.

To have a handful analysis of your competitors in the business in your business plan, you need to do the following:

• Select ten direct and indirect competitors to compare.
• Conduct research about their marketing efforts and product features.
• Then compare the gathered details to yours.

Gaining an understanding of your competitors through your competitive analysis helps you develop an effective strategy for the success of your franchise business plan and helps you get potential funders.

4 . Marketing Plan and Sales Plan

This section of your franchise business plan highlights your business’s strategy for building and maintaining a customer base and demand for your business. Thoroughly explain how you plan to advertise, your current advertising, and the research behind your strategy.

Next section, you can use the information from the required franchise training, which is the detailed information stated in Item 11 of the FDD or Franchise Disclosure Document .

So how to write a marketing plan and sales plan or your franchise business plan outline? Here are some steps to follow when creating these plans:

1. Define your target audience

Perform a market analysis to identify the specific demographic or customer segment that you should focus on with your marketing and sales plans. This will help you tailor your messaging and tactics to appeal to your ideal customer in your business plan.

2. Set marketing goals

Establish specific, measurable marketing goals that align with your franchise business plan template objectives. For example, you might set a goal to increase website traffic by a certain percentage or generate a certain number of leads through a marketing campaign.

3. Develop a marketing strategy

Outline the tactics you’ll use in your business plan to reach your target audience and achieve your marketing goals. This might include digital marketing, social media advertising, email marketing, content marketing, or other tactics.

4. Create a sales strategy

Determine how you’ll sell your franchise product or service to your target audience in your business plan. This includes setting up a sales team, developing a sales process, or leveraging existing relationships to generate leads. 

5. Identify key performance indicators (KPIs)

Define the metrics you’ll use in your business plan to measure the success of your marketing and sales efforts. This includes metrics such as conversion rates, cost per lead, or revenue generated from marketing campaigns.

6. Set a budget

Determine the personal savings you’ll need or plan to execute for the marketing and sales of your franchise businesses in your business plan. This might include allocating funds for advertising, marketing technology, or sales personnel.

Take the time to develop a thoughtful and comprehensive franchise business plan template that reflects your unique business and target audience.

5. Franchise Business Plan: Operations and Management

The operation and management section of your franchise business plan template focuses on the daily operations and activities of your existing franchise businesses. 

It encompasses not only the core business operations but also highlights the specific responsibilities and tasks, with a particular emphasis on your role as the owner in your business plan.

As you consider the ownership structure for this venture in your business plan, it is important to determine whether it will be a sole proprietorship with you as the sole owner, or if there will be multiple owners involved.

This section of your franchise business plan also includes the company’s staffing, logistics, and solutions to potential problems that could occur in the operation of your business. To know further details about your obligation as manager of your franchise businesses, Item 15 of the FDD will explain more.

6 . Financial Plan

The financial data portion of your franchise business plan should reflect and expand upon any facts. Also, the figures previously mentioned in your business plan template, including your executive summary. This section provides:

• hard numbers for your business costs, including your franchise fees, initial costs, etc.
• current funding,
• and expected funding necessary in the future.

To obtain more information when starting a franchise business plan template with a franchisor, you may refer to the Franchise Disclosure Document ( FDD ).

7. Franchise Business Plan: Pro Forma

The  pro forma is similar to the financial data section. But this part of the franchise business plan template focuses more on the three main accounting statements, which are:

• the balance sheet
• the cash flow
• and the profit or loss

You can create your pro forma in four steps in your business plan:

1. Create a chart of accounts.

2. Calculate your business projected earnings.

3. Create financial projections

4. Estimate cash flows

Consider speaking with the right person, such as an accountant or financial advisor to verify your estimates and validate your proposal to lenders.

Keep your Franchise Business Plan Updated!

Keeping franchise business plans updated is essential to ensure that they remain relevant and effective in guiding your franchise businesses’ growth and success.

Here are some steps to help you keep your franchise business plan up to date:

Regularly Review Financial Performance

Continuously monitor and analyze your franchise businesses’ financial performance. Compare actual financial results with the projections outlined in your business plan. Identify any discrepancies and assess the reasons behind them. Adjust your financial projection and strategy accordingly.

Customer Feedback and Market Research

Collect and analyze customer feedback through surveys, reviews, and direct interactions in your business plan. Use this feedback to improve franchise businesses’ products, services, and customer experience. Incorporate the insights gained from market research into your business plan to refine your strategies.

Assess and Adapt Marketing Strategies

Review your marketing and advertising strategies regularly in your business plan. Evaluate the effectiveness of different marketing channels and campaigns. Adjust your marketing plan based on what is working best to reach your target audience and achieve your goals.

Evaluate Operational Efficiency

Continuously assess your franchise’s operational processes and efficiency. Look for ways to streamline operations, reduce costs, and improve productivity. Update your operations plan in the franchise business plan to reflect any changes or enhancements.

Revisit and Revise Goals

Periodically review and reassess your short-term and long-term goals. Are they still aligned with your vision for the franchise? Adjust your goals as necessary and update your business plan with these revisions.

Seek Professional Assistance

Consider working with a franchise consultant or business advisor who specializes in franchise operations. They can provide expert insights and help you update your business plan outline effectively.

In conclusion, beyond relying solely on your personal savings, there exist multiple avenues to secure funding, such as bank financing, Small Business Administration (SBA) loans, franchise fees, franchisor programs, and various lending sources in your business plan.

To furnish lenders with a comprehensive understanding of both yourself and the franchise opportunity you aim to finance in your business plan, it is imperative to include essential elements such as management resumes, tax returns, media clippings, and other pertinent documentation.

By addressing these requirements proactively of your franchise business plan , you can expedite the financing process, minimizing delays in launching your franchise.

It’s worth noting that many franchisors mandate prospective franchisees to submit a franchise-specific business plan template as part of their application process. Therefore, it is advisable to ensure your plan aligns seamlessly with their stipulated requirements and guidelines.

To learn more about franchise businesses, talk to a franchise consultant .

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How To's

7 key elements of a good franchise business plan.

Writing a business plan is essential for any entrepreneur. However, creating one for a franchise business is different from another business type. You have to be aware of the needs of the franchisee and the franchisor. Once you have signed the franchise agreement , the franchisor will provide you with a marketing plan and other related materials. Below are the seven essential elements of a successful franchise business plan.

1. Executive Summary

This section summarizes the entire franchise business plan, including the key points and objectives. As it explains your business, the executive summary should answer these questions:

• Which product, service, or need does your business provide? 
• Is your business unique? 
• How will you guarantee your company’s success? 
• What skills do you possess that will help you achieve your objectives?

As the first part of the plan, it should leave a positive impression of you and your business to your readers. In short, it’s a written version of your business pitch. That said, the executive summary section should clearly define your business and lay down everything that makes your business proposition unique. 

2. Franchise Description

The following section presents the description of the franchise business model. This section should contain the following:

• Company Structure
• Mission Statement
• Fiscal Projections

Although you don’t need to provide detailed financial data, you should include an overview of your business, financial projections, and critical business facts. Likewise, you should share the goals and objectives for your business with your readers. Ensure your business goals are quantifiable and avoid vague terms that will only confuse your readers.

3. Market Analysis

The third section provides a detailed analysis of the industry and market trends. To analyze your competitors in the business, you need to do the following steps:

• Select ten direct and indirect competitors for comparison.
• Research their marketing strategies and product features.
• Compare the gathered details to business data. 

4. Marketing Strategy

You should also write a detailed marketing plan that includes market research, marketing goals, pricing strategies, advertising activities, and sales forecasts. This section will discuss your plan for implementing the said strategies and activities. You can use the information from the franchise training or the detailed information stated in Item 11 of the Franchise Disclosure Document .

5. Operations and Management

This section highlights your business’s strategy for maintaining a customer base and demand for your franchise business. You need to explain how you plan to advertise, your current advertising, and the background of your strategy. It also highlights the daily operation of your business. It covers the business operations and emphasizes the franchise owner’s responsibilities and tasks. This section also includes the company’s staffing, logistics, and solutions to potential challenges during the business operation. 

6. Financial Plan

The financial plan includes projected revenue, expenses, profits, and cash flow for the first few years of the franchise operation. If you’re starting your business with a franchisor, you can reference your Franchise Disclosure Document for this information. 

7. Pro Forma

You should also add a pro forma that focuses more on the three main accounting statements, such as the balance sheet, cash flow, and profit of loss. You can create your pro forma by following these steps:

• Create a chart of accounts.
• Calculate your business projected income.
• Project your liabilities and cost.
• Estimate cash flows

Consider talking to an accountant or financial advisor to confirm your estimates and validate your proposal to lenders or investors. 

Appendix (Optional)

Technically, the appendix is separate from the business plan but an additional section to present items that would enhance your document. Include items necessary to give the lender or investor a complete view of your franchise business. For example, you can include the resumes of management team members, tax returns, media clippings, etc.

A franchise business plan is a critical piece in accessing capital. A well-crafted business plan helps the franchise to clearly define the objectives, strategies, and techniques for a successful business operation. Also, this document allows entrepreneurs to identify potential risks and challenges associated with the franchise operation. It provides methods for mitigating or managing those risks. More importantly, this plan helps reduce the possibility of financial losses or other adverse outcomes for the franchisee. We hope this guide will inspire you to start drafting a detailed plan for the franchise business you have in mind now.  

Remember to continually update your business plan to reflect your business’s developing needs. At the minimum, it should be updated when something in your business changes.

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The Rise of Paris Banh Mi Franchise

Are you gearing up for a new business in 2024? Forget the next big tech start-up -the latest trend in town might be a perfectly toasted baguette. Take Paris Banh Mi Cafe and Bakery, for instance. This Vietnamese sandwich shop is rapidly growing, with locations popping up from coast to coast, from California to Florida. 

But what’s the secret behind their success? Explore why the Paris Banh Mi franchise has snowballed in the last two years and be inspired to start your own business .  

About Paris Banh Mi

The French baguette was introduced in Vietnam in the mid-19th century when the country was still a part of French Indochina. In the 1950s, Saigon saw the birth of a unique Vietnamese sandwich, “bánh mì,” which quickly became a favorite food of a large part of the population.

The story of Paris Banh Mi started in Orlando, Florida, at 1021 E Colonial Drive in 2019. Hien Tran and Doan Nguyen , a married couple passionate about food, opened the first Paris Banh Mi location. Their concept was simple: bring the delicious flavors of Vietnamese banh mi sandwiches, traditionally baguettes filled with savory meats and pickled vegetables, to a broader audience. 

The customers quickly fell in love with the fresh ingredients, bold flavors, and convenient fast-casual setting. Now,  Paris Banh Mi Cafe and Bakery promises to bring their customers the best “Baguette Banh Mi” taste.

In just two years, the laid-back cafe and bakery in Florida multiplied into a chain of stores in the  county. Today, Paris Banh Mi is serving customers in 46 locations all across the USA . The company plans to expand to 100+ locations by 2026. 

Each Paris Banh Mi Cafe and Bakery has a clean and spacious dining area, fast service, friendly staff, and a selection of delicious food and pastries. Take a peek at some of their mouth-watering baguette sandwiches filled with authentic Vietnamese ingredients.

Source: Paris Banh Mi website

For those craving something sweet, the bakery indulges you with a variety of French pastries. Check out their sandwiches, pastries, and beverages on the Paris Banh Mi Cafe and Bakery menu page.

Why Own a Paris Banh Mi Franchise

Paris Banh Mi is a franchised quick-service restaurant offering exciting opportunities for aspiring business owners. Many nail salon owners and aspiring entrepreneurs are switching to buying a Paris Banh Mi franchise. The main reasons why they love Paris are:

• It opens a great opportunity and is more profitable. 
• Seamless franchising process and fewer things to worry about
• Required low capital to open
• Higher end-of-year profits

The benefits extend beyond operational efficiency. Paris Banh Mi boasts a surprisingly low-cost entry point compared to other franchises. 

The initial franchise fee is manageable at $60,000. The total investment for opening a Paris Banh Mi can range from $200,000 to $500,000. This amount reflects the option to acquire a pre-existing, equipped location (second generation) for a lower investment cost or a complete build-out from scratch option. 

Regardless of the chosen route, the investment is significantly lower than that of building a business from the ground up, making Paris Banh Mi an attractive option for many entrepreneurs.

Licensing Information

Owning a Paris Banh Mi franchise is not just about delicious food! The company is looking for dedicated individuals who can run their restaurant full-time. They will provide a multi-day training program for new franchisees. In addition, Paris Banh Mi offers ongoing support for franchisees, guiding them to make informed decisions and thrive in this exciting industry.

You’re a good fit for a Paris Banh Mi Cafe Bakery franchise if you are: 

• Passionate about food, especially fresh baguettes and pastries
• A self-starter with a proven track record in business
• Financially responsible with a focus on results
• Ready to fully commit to building the Paris Banh Mi brand

If you have what it takes, don’t hesitate to contact them through the franchise hotlines on their franchise opportunities page . 

Buying a restaurant franchise is one of the most attractive routes in the world of franchising. Paris Banh Mi makes owning your own business a lot easier. Forget the high costs and headaches of starting from scratch. Their low investment and comprehensive training program mean you can be your own boss with a delicious product.  If you are ready to take a bite out of success, contact Paris Banh Mi today!

Chick-fil-A Franchising Opportunities in 2024

Buying a franchise from Chick-fil-A is an excellent money-making and healthy option. The fast-food chain has been serving hungry consumers the most delicious chicken sandwiches unmatched by other fast-food restaurants. Buying a Chick-fil-A franchise means investing in a good business and your future. It also lets you continue the culture behind the popular food chain. Here are Chick-fil-A franchising opportunities that will give you entrepreneurial freedom in 2024. 

Company Overview

Founded in 1946 by Truett Cathy, Chick-fil-A is deemed one of the longest-running chicken sandwich chains in the United States. The founder opened his first chain in Hapeville, Georgia, and has become a favorite soul food for many. Truett had worked in restaurants seven times a week and knew the importance of rest. That’s why he vowed to close Chick-fil-A every Sunday. He values rest and worship, so he sets aside one day of the week for his employees—a practice that Chick-fil-A still upholds today. 

Chick-fil-A also selects franchisees that uphold their values and passion. The company takes great care in selecting who they do business with, which includes getting to know candidates through a lengthy and intensive selection process. The founder’s vision is to influence the people and communities they serve. Chick-fil-A also seeks franchise candidates in Puerto Rico, Canada, and the United States. 

Chick-Fil-A candidates are required to show personal financial integrity and stewardship. They also need to have proven experience in leadership and a strong business acumen. Chick-fil-A ensures that candidates showcase entrepreneurial spirit, a strong character, and a growth mindset. This is to uphold the vision and values that Truett started in 1946. 

Franchise Training Details

• The initial on-site training programs last three to four weeks. However, the duration and actual location of the training will vary. 
• The training program primarily covers operational aspects, such as food preparation, service, customer relations, accounting, communications, purchasing, planning, maintenance, policies, management styles, and marketing. 
• The franchisor may require franchisees to attend various conferences and seminars occasionally. This is on top of the initial training program.
• The franchisor may also offer various programs that operators can use in advertising products or hiring staff, which aren’t stipulated in the Franchise Agreement. 

Franchise Territory

• The franchisor will grant franchisees one Chick-fil-A restaurant at the franchisor’s designated location. 
• Franchisees will not get exclusive or protected territory, so they may face competition from other operators. 

Franchise Obligations and Conditions

• Franchisees must devote their time and effort 100% to operating their Chick-fil-A restaurant. 
• The franchisor only allows franchisees to sell products approved by Chick-fil-A. This also applies to franchisees with a Chick-fil-A-associated food truck. 

Franchise Term and Renewal

The franchise term expires on early December 31, the year the agreement is signed or whatever the lease expiration is. Franchisees may apply for one-year extensions unless written notice is given 30 days before the franchise term expires. 

Financial Assistance

• The franchisor designates locations, leases, and subleases the store’s premises to franchisees. The lease and sublease terms will vary depending on the type of Chick-fil-A restaurant and location. 
• The franchisor also engages in concession agreements that oversee the utilization of non-traditional satellite unit locations with the proprietors or administrators of said satellite unit spaces.
• The franchisor offers extended payment periods for specific pre-opening costs stipulated in the Franchise Agreement. Additionally, the franchisor leases equipment to operators, charging a monthly rental fee based on the fair market rental value established by Chick-fil-A using its singular and exclusive business judgment. It’s important to note that neither the franchisor nor any affiliated entities provide any financing arrangements to operators, either directly or indirectly.

Did You Know?

Here are some fun facts about Chick-fil-A you need to know!

• Did you know that Chick-fil-A only uses peanut oil for frying? That’s what makes the chicken its unique flavor! Chick-fil-A is also the single most significant purchaser of peanut oil in the United States. They also believe peanut oil is a healthier option.
• The best Chick-fil-A promotional gig was the “First 100,” where the first 100 customers inside a new Chick-fil-A restaurant would get free chicken for a year. 
• Did you know that the founder, Truett Cathy, invented the chicken sandwich? He worked for a restaurant in Atlanta, and the newly delivered chicken breasts were too big to serve as airline food. He turned this into a meal for the staff. 
• You can get a free ice cream cone by walking up to the counter and trading your toy when ordering the kid’s meal. 

Franchise Cost

Your investment.

Here are the Chick-fil-A franchise costs:

If you’re looking for another investment opportunity, visit Franchise How’s website for more information. 

Zoom Sewer and Drain Cleaning Franchise Cost

Taking care of your home’s plumbing system is an essential part of being a homeowner. However, not everyone has the skill and patience to do it, and so franchises such as Zoom Sewer and Drain Cleaning are some of the most lucrative. Here’s what you need to know if you’re thinking of getting it:

Franchise Description

Zoom Sewer and Drain Cleaning provides drain cleaning, maintenance, sewer inspections, repair and replacement services for residential and commercial customers. The business began in 1995 and had been franchising since 2013. They have their headquarters in Norristown, Pennsylvania, and Zoom Franchise Company, LLC is the franchisor.

Training for the franchisee’s principal owner and personnel will be provided by the franchisor or its representatives and agents. Before starting your franchise, Zoom Sewer and Drain Cleaning will require you to complete their training program. It comes in two phases:

• Phase 1: 2 to 3 days training at the Franchise Business
• Phase2: 2 to 3 days in Norristown, PA

The franchisor may also require you to attend additional training during the length of your term agreement. The franchisor is planning to hold a 2 to 3-day national Zoom Fest yearly. This will be held in Norristown, PA, or any location it designates. They will require franchisees to attend, but their managers will be welcome.

The franchisor will designate a protected territory where the franchisees will operate their business. Before signing any Franchise Agreement, both the franchisor and the franchisee will agree on a geographic territory. 

The franchisor will base the protected territory on contiguous zip codes that will consist of approximately 500,000 individuals. This will be based on the most recent U.S. Census data at the time of signing the franchise agreement. This means that as long as the deal is taking effect, the franchisor or its affiliates will not locate, operate, or grant a franchise for another Zoom Sewer and Drain Cleaning business within the protected territory.

Obligations

The franchisor requires the franchisee or its principal owner to exert every effort to take responsibility for the management of the business. They will do this on a daily basis unless they agree on an alternate arrangement. With the franchisor’s discretion, the franchisee can hire a manager to handle the operations of the business.

Franchisors will also require you to sell products and services that have their approval. On the other hand, franchisees aren’t allowed to sell unauthorized products or services in compliance with the franchise agreement. Franchisees are also not allowed to solicit business outside of the protected territory. They are, however, permitted to serve customers outside of the protected territory as written in the FDD.

Term of Agreement

The initial franchise will take ten years after the signing of the agreement. You can renew the contract for another ten years, for four times, if you continue to meet the requirements.

Zoom Sewer and Drain Cleaning doesn’t offer direct or indirect financial assistance to its franchisees. In addition, they will not guarantee a franchisee’s note, lease, or obligation.

Get to know more about Zoom Sewer and Drain Cleaning before you get that franchise. Here are some facts about the business:

• They have very little competition in the niche. Most of their competitors are independent plumbers and contractors
• According to the company’s co-founder and COO, Ellen Rohr, this is a recession-resistant business, and the Covid-19 pandemic has proven this
• They have a reported $12 million in revenue with 53 employees and 15 franchisees 

The table below shows the estimated cost of a Zoom Sewer and Drain Cleaning franchise. Take note that these numbers may change without any prior notice.

Other Costs

For other franchising information, check out more articles here at Franchise How !

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The Franchising Business Model Explained: A Comprehensive Guide

Unlock the secrets of the franchising business model with our comprehensive guide! Discover the ins and outs of this popular business model, from the benefits and challenges to the key steps in getting started.

Understanding the Basics of Franchising

Franchising is a fascinating business arrangement that has revolutionized the way entrepreneurs can start and operate their own businesses. By exploring the world of franchising, individuals can tap into the power of established brands, proven systems, and ongoing support to increase their chances of success. Let's delve deeper into the basics of franchising and discover the key elements that make it such a compelling business model .

What is a Franchise?

At its core, a franchise is a business arrangement where one party, known as the franchisor, grants another party, known as the franchisee, the right to operate a business using its established brand, systems, and processes. This arrangement allows the franchisee to leverage the reputation and recognition of the franchisor's brand, benefiting from the trust and loyalty already established by the franchisor in the market.

When a franchisee purchases a franchise, they are essentially investing in a proven business model. This means that they don't have to start from scratch and figure out every aspect of running a successful business. Instead, they gain access to a comprehensive set of guidelines, procedures, and strategies that have already been tested and refined by the franchisor.

Furthermore, the franchisor provides ongoing support and training to ensure the franchisee's success. This support can include assistance with site selection, marketing campaigns, operational guidance, and continuous training programs. By receiving this support, franchisees can navigate the challenges of starting and growing a business with the backing of experienced professionals.

Key Elements of a Franchise

A successful franchise requires several key elements to thrive. Firstly, there needs to be a well-defined brand and business concept that has been proven to be successful. The brand serves as the foundation of the franchise, encompassing its values, image, and reputation. A strong brand helps attract customers and differentiate the franchise from competitors.

Additionally, the franchisor must provide ongoing support and training to ensure the franchisee's success. This support can take various forms, such as regular communication, field visits, training programs, and access to a network of fellow franchisees. The franchisor's commitment to supporting their franchisees is crucial in maintaining the overall success of the franchise system.

Furthermore, a franchise agreement, a legal document outlining the rights and responsibilities of both parties, is an integral part of any franchise. This agreement ensures that both the franchisor and the franchisee understand their roles and obligations, providing a framework for the relationship between the two parties. It covers areas such as fees, territory, intellectual property rights, and termination conditions.

Types of Franchise Models

Franchises come in various shapes and sizes, catering to different industries and business models. Understanding the different types of franchise models can help entrepreneurs choose the one that aligns with their interests, skills, and financial capabilities.

One common type of franchise model is the product distribution franchise. In this model, the franchisee sells products supplied by the franchisor. This can include retail stores, where the franchisee sells physical products, or distribution centers, where the franchisee supplies products to other businesses. Product distribution franchises often benefit from the established reputation and quality of the franchisor's products, making it easier to attract customers.

On the other hand, there are service-based franchises, where the franchisee provides services using the franchisor's established methods. These franchises can span various industries, such as cleaning services, home repairs, tutoring, or fitness centers. Service-based franchises offer entrepreneurs the opportunity to tap into a growing market demand for specific services while benefiting from the franchisor's expertise and support.

Additionally, there are also business format franchises, which encompass both product and service aspects. In this model, the franchisee not only sells products but also provides a range of services related to those products. For example, a car dealership franchise not only sells cars but also offers maintenance and repair services. Business format franchises provide a comprehensive solution to customers, allowing them to fulfill their needs in one place.

As you can see, franchising offers a wide range of possibilities for entrepreneurs looking to start their own business. By understanding the basics of franchising, the key elements that make a franchise successful, and the different types of franchise models available, individuals can make informed decisions and embark on a rewarding entrepreneurial journey.

The Pros and Cons of Franchising

Franchising offers numerous benefits that make it an attractive option for aspiring business owners. Firstly, you are buying into a proven business model with a track record of success. This significantly reduces the risk compared to starting a business from scratch. When you invest in a franchise, you are essentially purchasing a blueprint for success. The franchisor has already done the hard work of figuring out what works and what doesn't, saving you valuable time and resources.

Secondly, when you become a franchisee, you gain access to the franchisor's established brand, marketing materials, and customer base, which puts you ahead of the game. Building a brand from scratch can be a daunting task, but with a franchise, you are already starting with brand recognition and a loyal customer following. This gives you a head start in attracting customers and generating revenue.

Furthermore, ongoing support and training from the franchisor ensure that you are never alone on your entrepreneurial journey. The franchisor is invested in your success and will provide you with guidance and assistance every step of the way. Whether it's help with marketing strategies, operational challenges, or employee training, you can rely on the franchisor's expertise and experience to help you navigate any obstacles that may arise.

While franchising has its advantages, it also comes with its fair share of drawbacks. One significant disadvantage is the upfront investment required to purchase a franchise. Unlike starting a business from scratch, where you have more control over your initial costs, buying into a franchise can be quite expensive. You not only have to pay for the franchise rights but also cover the costs of equipment, inventory, and any necessary renovations or modifications to the premises.

Additionally, as a franchisee, you must adhere to strict guidelines and business practices set by the franchisor. While this can provide a sense of security and stability, it can also limit your flexibility and creativity as a business owner. You may have to follow standardized procedures and operate within a predetermined framework, which can be restrictive for those who prefer more autonomy in decision-making.

Furthermore, ongoing franchise fees and royalties may eat into your profits. In addition to the initial investment, franchisees are typically required to pay ongoing fees to the franchisor. These fees can include royalties based on a percentage of sales or fixed monthly fees. While these fees are meant to cover the ongoing support and benefits provided by the franchisor, they can impact your bottom line and reduce your overall profitability.

It's crucial to carefully consider these factors before taking the leap into franchising. While franchising can offer a proven business model, brand recognition, and ongoing support, it's important to weigh the financial commitment, potential limitations, and ongoing fees against the benefits. Conduct thorough research, seek advice from professionals, and evaluate your own goals and preferences to determine if franchising is the right path for you.

The Legal Aspects of Franchising

Franchising has become a popular business model for entrepreneurs looking to start their own business while benefiting from an established brand and proven business system. However, before entering into a franchise, it is crucial to understand the legal aspects involved to protect both the franchisor and franchisee. Two key legal documents that play a significant role in franchising are the franchise agreement and the Franchise Disclosure Document (FDD).

Franchise Agreement: An Overview

A franchise agreement is a legally binding contract that outlines the rights, obligations, and expectations of both the franchisor and franchisee. This agreement serves as the foundation for the franchisor-franchisee relationship and covers various essential aspects of the franchise business.

One crucial element addressed in the franchise agreement is the territory. The agreement specifies the geographic area in which the franchisee has the exclusive right to operate the franchise. This ensures that the franchisor does not grant additional franchises in the same area, which could potentially lead to competition between franchisees.

Another critical aspect covered in the franchise agreement is the fees. The agreement outlines the initial franchise fee, which is the upfront payment made by the franchisee to the franchisor for the right to operate the franchise. Additionally, it may include ongoing royalty fees, marketing fees, and other financial obligations that the franchisee must fulfill throughout the duration of the agreement.

Intellectual property rights are also addressed in the franchise agreement. This includes the use of trademarks, logos, and other proprietary information owned by the franchisor. The agreement specifies how the franchisee can use these intellectual property rights and the consequences of any infringement.

Furthermore, the franchise agreement includes termination clauses that outline the circumstances under which either party can terminate the agreement. These clauses protect both the franchisor and franchisee in case of breaches, non-compliance, or other unforeseen circumstances.

Given the complexity and legal implications of a franchise agreement, it is essential for both parties to consult legal professionals experienced in franchising. These professionals can ensure that the agreement is fair, balanced, and favorable to both the franchisor and franchisee, reducing the risk of potential disputes or legal issues in the future.

Understanding Franchise Disclosure Document (FDD)

In addition to the franchise agreement, the franchisor is legally required to provide the franchisee with a Franchise Disclosure Document (FDD) before the franchisee signs any binding agreements or makes any financial commitments.

The FDD is a comprehensive document that provides detailed information about the franchise system. It serves as a valuable resource for potential franchisees to evaluate the franchise opportunity and make informed decisions. The FDD typically includes the following sections:

• Franchisor's Background: This section provides information about the franchisor's history, experience, and key personnel. It helps the franchisee assess the franchisor's credibility and track record.
• Franchisee Obligations: This section outlines the responsibilities and obligations of the franchisee, including operational requirements, training, and ongoing support provided by the franchisor.
• Initial and Ongoing Costs: Here, the FDD details the initial investment required to start the franchise, including franchise fees, equipment costs, and other expenses. It also covers ongoing costs such as royalties, advertising fees, and any other financial obligations.
• Financial Performance: This section provides historical financial information about the franchise system, including sales figures, profitability, and other relevant financial data. It helps the franchisee assess the potential profitability of the franchise.
• Legal and Litigation History: The FDD discloses any past or ongoing legal disputes involving the franchisor, such as lawsuits or regulatory actions. This information allows the franchisee to evaluate any potential legal risks associated with the franchise.

Reviewing the FDD thoroughly is crucial for potential franchisees as it provides valuable insights into the risks and opportunities associated with the franchise. It is recommended to seek professional advice, such as consulting with a franchise attorney or accountant, to ensure a comprehensive understanding of the FDD and its implications.

In conclusion, understanding the legal aspects of franchising is essential for both franchisors and franchisees. The franchise agreement and Franchise Disclosure Document serve as vital tools in establishing a fair and mutually beneficial franchisor-franchisee relationship. Seeking legal guidance and conducting thorough due diligence before entering into a franchise agreement can help mitigate risks and set the foundation for a successful franchise venture.

Steps to Buying a Franchise

Researching potential franchises.

The first step in buying a franchise is conducting thorough research. Start by identifying industries that align with your interests and skills. Then, compile a list of potential franchises and delve into their backgrounds, success rates, and financial requirements. Consider seeking advice from franchise consultants or attending franchise expos to gather all the necessary information.

Evaluating Your Financial Capability

Once you have a list of potential franchises, it's time to assess your financial situation. Determine how much capital you can invest and explore financing options if needed. Remember to factor in not just the initial investment but also ongoing expenses such as royalties, marketing fees, and inventory costs. It's crucial to have a clear understanding of your financial capabilities before proceeding.

Negotiating and Signing the Franchise Agreement

After selecting the franchise that suits your interests and finances, it's time to negotiate the terms of the franchise agreement with the franchisor. Seek legal advice to ensure that you are getting a fair deal. Once both parties have come to an agreement, sign the franchise agreement and get ready to embark on your entrepreneurial journey!

Running a Successful Franchise

Essential skills for franchise owners.

To run a successful franchise, certain skills and qualities are essential. These include strong leadership and management skills, effective communication, problem-solving abilities, and a customer-centric mindset. Additionally, being adaptable and willing to learn from both successes and failures will help you navigate the ever-changing business landscape.

Marketing Your Franchise

Marketing plays a crucial role in the success of any business, including franchises. As a franchise owner, you will have access to the franchisor's marketing materials and strategies. However, it's important to localize your marketing efforts to target your specific customer base. Utilize both traditional and digital marketing channels to reach a wider audience and create a strong brand presence in your local market.

Managing Franchise Operations

Effective operations management is vital for the smooth running of a franchise. This includes managing inventory and supply chains, maintaining quality control, and ensuring adherence to the franchisor's established systems and processes. Implement efficient processes and leverage technology to streamline operations and provide an exceptional customer experience.

Now that you have a comprehensive guide to franchising, it's time to take the leap and explore the exciting world of franchising. Remember, success as a franchisee requires dedication, hard work, and a passion for providing outstanding products or services. So, seize this opportunity and turn your dream of owning a business into a reality!

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What is a Franchisor?

A franchisor is a business or corporation that licenses the right to ope rate in its name and sell its products or services using the franchise’s branding, assets, and intellectual property. The advantage to becoming a franchisor is that franchising allows a business to expand its locations and size more quickly and more successfully by relying on franchisees to use their local market knowledge to grow the business .  

What Is A Franchise? How Does it Work?

Franchising has emerged as a popular and strategic way for businesses to expand and for individuals to own a piece of a proven business model. At its core, a franchise allows one to use the established business systems, trademarks, and support structure of a larger company, paving a pathway to entrepreneurship. In this article, we'll delve deep into understanding what a franchise is, how it operates, and the various facets associated with it.

Understanding Franchise

A franchise is a business arrangement where one party, the franchisor, grants another party, the franchisee, the rights to use its brand, business model, and proprietary knowledge in exchange for a fee. This system allows the franchisee to operate under the brand's name, benefiting from established brand recognition, training, and ongoing support. In return, the franchisor expands its brand reach without the direct cost and risk associated with opening new locations. The symbiotic relationship provides opportunities for both parties: the franchisor grows its brand footprint, while the franchisee gets a jump-start with a tried and tested business blueprint.

Franchise Basics and Regulations

At its foundation, franchising is a contractual relationship between two entities: the franchisor, who owns the original business and brand, and the franchisee, who buys the rights to operate a branch of that business. This relationship is governed by certain basics and regulations to ensure clarity, fairness, and protection for both parties involved.

• Franchise Disclosure Document (FDD): Legally mandated in many countries, the FDD provides potential franchisees with essential information about the franchisor, the franchise system, and the terms of the agreement. It covers topics such as the company’s financial health, fees, responsibilities of both parties and any litigation history.
• Initial Franchise Fee: This is the upfront fee that franchisees pay to the franchisor to join the franchise system. It covers costs like training, support, and rights to use the brand name.
• Royalties: A recurring payment, typically a percentage of the franchise's gross revenue, paid by the franchisee to the franchisor. It compensates the franchisor for ongoing support, use of the brand name, and access to the business model.
• Territorial Rights: Many franchise agreements define a territory within which the franchisee can operate exclusively. This ensures that the franchisor doesn't oversaturate a market or place franchisees in direct competition with each other.
• Training and Support: The franchisor usually offers initial training for the franchisee and their staff, covering business operations, brand guidelines, and customer service standards. Ongoing support can include marketing, IT support, and business strategy consultations.
• Advertising Fees: Franchisees may be required to contribute to a collective advertising fund managed by the franchisor, which promotes the brand on a national or regional level.
• Regulations by Country: Franchising laws vary from country to country. In the U.S., for instance, the Federal Trade Commission (FTC) oversees franchising, ensuring transparency and fairness. In other countries, there might be specific government bodies or industry associations governing the franchising sector.
• Renewal and Termination: The franchise agreement will have stipulated terms. Once it ends, franchisees might have the option to renew. However, both parties must adhere to the agreement's guidelines, and breaches can lead to termination.

Understanding these basics and the regulatory landscape is crucial for both franchisors and franchisees. It ensures that the relationship remains transparent, beneficial, and in compliance with local laws and industry standards.

Types of Franchise Models

Franchising is a diverse realm with various models tailored to different business needs and market scenarios. Each model offers distinct operational methods and relationships between the franchisor and franchisee.

#1 Business Format Franchise 

This is the most common type. Here, the franchisor provides a proven business model, brand guidelines, operational procedures, training, and marketing support. In return, the franchisee agrees to operate the business according to these set parameters. Examples include fast-food restaurants like McDonald's or service providers like UPS Store.

#2 Product Distribution Franchise 

Similar to supplier-dealer relationships, this model is based on the franchisee distributing the franchisor's products. The franchisor licenses its trademark and logo but doesn't provide the entire system for running the business. Examples include gas stations and car dealerships.

#3 Manufacturing Franchise 

In this model, the franchisor allows the franchisee to produce and sell goods using its name and trademark. The franchisee manufactures the product and then has the right to distribute it under the franchisor's brand name. A classic example is the beverage industry, where local companies might produce globally-recognized drinks.

#4 Conversion Franchise 

Existing businesses switch to a franchise model under this approach. By converting, the business can benefit from the franchisor's brand name and support while maintaining some of its original business practices. This is often seen in real estate agencies or local service providers.

#5 Master Franchise (or Sub-franchising) 

This model allows the franchisee (master franchisor) to not only own and operate a unit but also to grant franchises to others within a specified territory. This creates another layer where the master franchisor essentially becomes a mini-franchisor for a specific region.

#6 Area Developer Franchise 

An individual or entity gets the right to open multiple franchised locations within a predefined area. The agreement typically includes a development timeline, ensuring growth within the allocated region.

Each franchise model has its own set of advantages, challenges, and suitability depending on the nature of the business, market conditions, and the goals of both the franchisor and franchisee.

What are the Advantages and Disadvantages of Franchising

Franchising offers a unique blend of opportunities and challenges for both franchisors and franchisees. By analyzing its advantages and disadvantages, potential franchisees can make informed decisions on whether this business model aligns with their goals.

Franchising offers individuals an opportunity to step into the business world with the backing of established brands, proven systems, and comprehensive support, reducing many of the uncertainties that come with starting an enterprise from scratch.

• Established Brand Recognition: Franchisees benefit from the established reputation and trustworthiness of a known brand, reducing the time and effort required to build a customer base.
• Tried and Tested Business Model: Franchisors provide a proven operational blueprint, reducing the risks associated with trial and error in business strategies.
• Training and Support: Franchisors offer training to franchisees, ensuring consistent service quality across all outlets. They also provide ongoing operational and marketing support.
• Economies of Scale: Purchasing in bulk or collective advertising often leads to cost savings, benefitting the entire franchise network.
• Higher Success Rate: Compared to independent startups, franchises generally have a higher success rate due to the established system they operate within.

Disadvantages

While franchising provides a structured pathway to business ownership, it also imposes certain limitations on autonomy, creativity, and financial commitments, which may hinder the entrepreneurial spirit and flexibility in decision-making.

• Initial and Ongoing Costs: Franchisees need to pay both an upfront fee and ongoing royalties, which can be a significant financial commitment.
• Limited Creativity: Operating under a franchise means adhering to set guidelines, which can limit the franchisee's ability to innovate or tailor the business to local preferences.
• Dependence on Franchisor's Reputation: If the franchisor encounters negative publicity, it can adversely affect all franchisees, regardless of individual outlet performance.
• Contractual Restrictions: The franchise agreement might have strict terms, such as limiting the franchisee's ability to sell the business or requiring specific suppliers.
• Potential Conflicts: Differences in business goals or operational views can lead to conflicts between the franchisor and franchisee.

In sum, while franchising can be a gateway to entrepreneurship with reduced risks, it also comes with limitations and challenges that require careful consideration.

Challenges and Obstacles of Franchising

While the franchise model offers numerous advantages, it's essential for potential franchisees to be aware of the challenges and pitfalls they might encounter. This knowledge can help them make informed decisions and navigate the franchise landscape more effectively.

• High Initial Investment: Some franchises require a substantial initial investment, which may not be feasible for every aspiring franchisee. This can include the cost of property, equipment, inventory, and the franchise fee.
• Hidden Costs: Apart from the clear costs stated in the franchise agreement, there may be other unexpected expenses related to marketing, renovations, or additional training.
• Inflexibility: Franchisees often have to strictly adhere to the franchisor's business model and protocols, which might restrict innovation or localization of the business.
• Dependence on the Franchisor: The success of a franchisee is closely tied to the franchisor. If the franchisor's brand suffers or if they make poor strategic decisions, franchisees can be adversely affected.
• Contractual Limitations: Some franchise agreements might have restrictive clauses like non-compete stipulations, limiting the franchisee's ability to diversify or sell the business.
• Ongoing Fees: Even if a franchise is performing poorly, the franchisee is typically still required to pay ongoing royalties and advertising fees.
• Unequal Support: At times, franchisors might prioritize and provide more support to certain franchisees based on location, performance, or other factors, leading to feelings of inequality among franchisees.
• Renewal Concerns: When the franchise agreement term ends, there's no guaranteed renewal. This means franchisees might invest years into the business only to face uncertainties at the end of their contract.
• Lack of Control Over Supplies: Many franchisors require franchisees to purchase supplies only from approved vendors, which might not always be cost-effective or of the desired quality.
• Market Saturation: If a franchisor sells too many franchises within proximity, it can lead to market saturation, reducing profitability for all franchisees in the area.

Awareness of these challenges and potential pitfalls allows potential franchisees to enter the franchising world with their eyes wide open, preparing them to address and navigate these issues effectively.

The Franchise Agreement

Central to the franchising model is the franchise agreement, a legally binding document that lays out the terms and conditions governing the relationship between the franchisor and franchisee. It establishes the rights and obligations of both parties and provides a framework for how the franchise will operate. Understanding its components is crucial for anyone considering entering into a franchise relationship.

• Definition of Terms: The agreement begins by clearly defining terms to avoid ambiguities. This includes specifying who the franchisor and franchisee are, the business's nature, and other essential terms.
• Duration: This section stipulates the length of time the franchisee is permitted to operate the franchise. It also often includes details on renewal options and conditions.
• Fees and Payments: Here, all financial aspects are detailed, including the initial franchise fee, ongoing royalties, advertising contributions, and other potential costs.
• Training and Support: The agreement outlines the type, duration, and frequency of training provided to the franchisee. It also details ongoing support mechanisms, such as marketing assistance, operational guidance, and IT support.
• Territorial Rights: This section defines the territory in which the franchisee can operate and whether or not they have exclusive rights within that territory.
• Brand Standards and Operating Procedures: To maintain brand consistency, the agreement specifies how the business should be run, from the appearance of the outlet to service quality, product offerings, and marketing activities.
• Supply Chain: Details about approved suppliers, purchasing requirements, and inventory standards are provided to ensure consistent product and service quality across the franchise network.
• Advertising and Marketing: The agreement often mandates contributions to a collective advertising fund and outlines the franchisor's and franchisee's responsibilities regarding brand promotion.
• Termination: This section explains under what conditions the agreement can be terminated, either by the franchisor or franchisee. It will detail breaches that may result in termination and the process for resolving disputes.
• Transfer and Exit: Should the franchisee wish to sell their franchise or transfer it to another party, the conditions and procedures for doing so are described.
• Dispute Resolution: In case of disagreements or conflicts, this section provides a mechanism—such as arbitration or mediation—for resolving issues.

Given its legal significance and the long-term implications of its terms, potential franchisees are advised to thoroughly review the franchise agreement and consult with legal professionals before signing.

How to Choose a Franchise

Embarking on a franchise journey is both exciting and daunting. With a myriad of options available, potential franchisees must undertake a systematic approach to select the right opportunity that aligns with their goals, values, and resources. Here's a step-by-step guide on how to make an informed decision:

1. Self-Assessment

• Interests and Passions: Choose a franchise in an industry or sector you're passionate about or have a genuine interest in.
• Skills and Experience: Assess your strengths and weaknesses. Does the franchise require expertise you already possess, or are you willing to learn?

2. Research

• Industry Trends: Identify industries with growth potential. Look for sectors resilient to economic downturns or those on the cusp of innovation.
• Franchise Directories: Utilize directories and online platforms dedicated to franchise opportunities to gather initial information.

3. Financial Considerations

• Initial Investment: Determine the total startup cost, including franchise fees, equipment, inventory, and property costs.
• Ongoing Costs: Understand the ongoing fees, such as royalties and advertising levies.
• Profit Potential: Review the franchise's financial performance history and projections.

4. Training and Support

• Evaluate the training programs offered. Does the franchisor provide comprehensive training for you and your staff?
• Look for franchises that offer robust ongoing support in marketing, operations, and technology.

5. Franchise Disclosure Document (FDD)

• Carefully review the FDD, a legal document that franchisors are mandated to provide. It contains critical details about the franchise's operations, financial health, and franchisor-franchisee relationships.

6. Territory and Exclusivity

• Ascertain if the franchise offers protected territories. Will you have exclusive rights in your region, or can the franchisor open additional units nearby?

7. Franchisor's Reputation

• Conduct due diligence. Look for reviews, testimonials, and any potential red flags in the franchisor's history.
• Speak to existing franchisees about their experiences, challenges, and successes.

8. Exit Strategy

• Familiarize yourself with the terms of the franchise agreement related to selling your franchise or exiting the network.

9. Legal Consultation

• It's advisable to consult with a franchise attorney before signing any agreement. They can help review the terms and ensure your interests are protected.

10. Intuition

• Beyond all research and rationale, trust your gut feeling. Your instinct, combined with thorough research, will guide you toward the right decision.

Selecting a franchise is a monumental decision that sets the course for your entrepreneurial journey. By approaching the selection process methodically and seeking expert advice when needed, you can position yourself for a fulfilling and successful franchise venture.

How Does the Franchiser Make Money?

Understanding the revenue streams for a franchisor is crucial for potential franchisees, as it offers insight into the motivations and business model of the franchise system. Here are the primary ways a franchisor generates income:

• Initial Franchise Fees: When a new franchisee joins the network, they pay a one-time upfront fee. This fee often covers costs associated with training, support, and granting the rights to operate under the franchisor's brand.
• Royalties: Franchisees typically pay ongoing royalties, which are either a set fee or a percentage of their gross sales. These royalties compensate the franchisor for the continued use of the brand, ongoing support, and system innovations.
• Advertising Fees: Franchisees may contribute to a collective marketing fund. The franchisor uses this fund to run national or regional advertising campaigns, promote the brand, and sometimes support local marketing initiatives.
• Product or Supply Sales: In some franchise systems, the franchisor might produce products or goods (e.g., ingredients for a restaurant) that franchisees are required to purchase. The franchisor profits from selling these items to franchisees, sometimes at a markup.
• Real Estate Leasing: Some franchisors own prime real estate locations and lease these properties to their franchisees, earning rental income.
• Technology and Service Fees: Franchisors might offer proprietary software, IT solutions, or other services to franchisees for a fee.
• Training and Onboarding Charges: Beyond the initial training, franchisors might charge additional fees for ongoing training sessions, seminars, or refresher courses.
• Franchise Renewal Fees: When a franchise agreement reaches its end, and the franchisee wishes to continue, there might be a renewal fee payable to the franchisor.
• Transfer Fees: If a franchisee decides to sell their franchise to a third party, the franchisor might charge a transfer fee to facilitate the change of ownership.
• Ancillary Revenue Streams: Depending on the franchise model, franchisors might have other revenue streams, such as online sales, licensing their brand for merchandise, or offering consulting services.

While franchisors have multiple revenue avenues, it's essential to recognize that their success is closely tied to the success of their franchisees. A thriving network of profitable franchise units often translates to a successful franchisor. As such, the best franchisors reinvest a significant portion of their earnings into system improvements, training, marketing, and support to ensure the long-term growth and viability of the brand and its franchisees.

What are the Risks?

While franchising presents numerous advantages, it's not without its challenges and risks. Aspiring franchisees must recognize and understand these potential pitfalls to make informed decisions. Here are the primary risks associated with franchising:

• Financial Loss: Like any business venture, there's no guarantee of success. Franchisees can face financial losses if the business doesn't perform as anticipated.
• Oversaturation: If the franchisor doesn't manage territories effectively, they might grant too many franchises within a specific area. This can lead to franchisees competing with one another, potentially diluting sales.
• Reputation Dependency: Franchisees are heavily reliant on the franchisor's brand reputation. Any negative incidents, whether at the corporate level or at another franchise location, can adversely impact all franchisees.
• Limited Autonomy: Franchisees must adhere to the franchisor's guidelines, which might restrict innovation and adaptation to local market conditions.
• Hidden Costs: Beyond the initial franchise fee and royalties, there might be unexpected costs, such as mandatory participation in promotional campaigns or system upgrades.
• Contractual Disputes: Franchise agreements can be complex. Misunderstandings or disagreements over contract terms can lead to disputes, legal battles, or even termination of the franchise agreement.
• Renewal and Termination: Franchise agreements are for a predetermined term. There's no guarantee of renewal, and underperforming or non-compliant franchisees might face non-renewal or even premature termination.
• Changing Market Dynamics: External factors, like economic downturns, changes in consumer behavior, or new competitors, can impact the franchise's profitability.
• Inadequate Support: Some franchisors might not provide the level of training, marketing, and operational support that franchisees expect or require.
• Locked into Suppliers: Franchisors might require purchases from specific suppliers, even if cheaper or better alternatives are available.
• Exit Challenges: Selling a franchise can be more complicated than selling an independent business. The franchisor usually has the right of first refusal or must approve the new franchisee, limiting the pool of potential buyers.

It's essential for potential franchisees to conduct thorough due diligence, seek legal advice, and communicate with existing franchisees to understand and mitigate these risks. By being well-informed and proactive, franchisees can navigate the challenges of franchising and increase their chances of success.

Trends in Franchising

Franchising is an ever-evolving industry subject to shifts in technology, consumer behaviors, and global events. Here's a reformatted and segmented look into the significant trends affecting the franchise landscape:

1. Embracing Digital Transformation

In today's digital era, franchises are integrating technological advancements to streamline operations, enhance customer interactions, and stay competitive in an increasingly online marketplace.

• Point-of-Sale Systems & AI: Modern franchises are leveraging cutting-edge POS systems and AI-driven tools for more efficient operations and enhanced customer service.
• Digital Marketing: The digital realm, including social media and influencer marketing, is becoming crucial for franchise visibility and customer engagement.
• E-commerce & Delivery: Adapting to consumer habits, franchises, especially in retail, are integrating online sales platforms and partnering with delivery services.

2. Consumer-Centric Shifts

Reflecting evolving consumer preferences and values, franchises are personalizing their offerings, delivering unique experiences, and ensuring they meet the specific demands of their target audience.

• Health Focus: With wellness in the spotlight, franchises, particularly in food and fitness, are pivoting towards healthier options and specialized offerings.
• Localization: To resonate with local audiences, franchises are tailoring their offerings and adding regional flavors or services.
• Experiential Engagements: Beyond mere transactions, franchises are providing experiences through workshops, classes, or unique store interactions.

3. Sustainable & Ethical Practices

With a growing global emphasis on sustainability and ethics, franchises are adopting practices that prioritize environmental consciousness and transparency, aligning with consumer expectations of responsible business conduct.

• Eco-initiatives: Responding to environmental concerns, franchises are moving towards sustainable sourcing, waste reduction, and green energy practices.
• Transparency: Modern consumers value openness, pushing franchises to be clearer about their sourcing, ingredients, and operations.

4. Operational Trends

As the franchising landscape shifts, new operational strategies and models emerge, allowing franchisees and franchisors to optimize performance, adapt to market changes, and explore novel avenues for growth.

• Home-based Opportunities: Reflecting the work-from-home wave, there's a surge in franchises offering home-based opportunities in sectors like consulting and education.
• Global Horizons: Franchisors are expanding their footprint, venturing into international markets with growth prospects.
• Multi-unit Ownership: Experienced franchisees are increasingly managing multiple units, optimizing their operations based on shared insights.

Franchising, as a robust and adaptive business model, offers both opportunities and challenges. As digital transformation, consumer preferences, sustainability, and operational dynamics shape its landscape, it's essential for both franchisors and franchisees to stay informed and agile. By understanding the intricacies and trends within franchising, stakeholders can make informed decisions, ensuring sustained growth and success in this ever-evolving industry.

Javier is an experienced franchise industry professional with a focus on development, operations, and performance. With almost a decade of experience in the industry, he has witnessed both the successes and failures of franchise owners. Javier strongly believes that buying a franchise is not just an investment, but a life-changing event that presents a unique opportunity for personal and professional growth. He enjoys helping aspiring franchise owners navigate the decision-making process and increase their chances of success.

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Creating a business plan for your franchise

If it seems like new Starbucks locations are popping up faster than weeds in your backyard, there’s a sound reason behind it. Successful franchises rapidly expand their reach because they begin with an effective business plan and focus on growth.

Related: Franchise development—what you need to know

Creating a business plan is the necessary first step for any business owners who want to bring a franchise into a new market. Well-crafted franchise business plans are the equivalent of an elevator pitch. Business owners can use them to convince others to invest the capital they need to hit the ground running. Lenders also require a business plan before they will sign off on any loans to a prospective franchise owner.

Creating your franchise business plan

A typical business plan includes four main sections. You can touch on these sections in an executive summary, then break down the details in each individual section. Each section functions like a signpost on the roadmap you’re drawing for your new business to reach its goals. Here’s an overview of those four sections and what they should include.

Business description

The purpose for this section is basically self-explanatory. It offers basic and essential information on the franchise itself. For example, it describes the products and services your business offers. You can also identify your customers and how your business will help them.

You should evaluate the market where you wish to set up shop and include information about it in this section. This includes an analysis of your direct competitors, identifiable challenges or risks that come with doing business in that market, and a breakdown of your target demographic. Discuss how you will approach and manage each of these factors within your business operations.

Your business plan needs to detail your company’s management structure and any related core values or philosophies. Which positions will be responsible for managing day-to-day operations? Who will fill these positions? What qualifications and skills are required for each position? How will you hire and train the necessary personnel? What salaries and benefits will you offer to these employees?

Discuss the individuals who will be filling management and leadership roles on your team. Explain—in depth—what makes those particular individuals qualified to succeed in those roles. Franchising is only as successful as the management team doing the work behind the scenes, and the people reading your business plan will look over this section carefully.

A new business can only succeed if it uses the right formula to reach potential customers and turn them into real customers. This is where your marketing plan comes into play. Your business plan should detail how you will reach customers and convince them to walk through your door.

Doing thorough market analysis is critical in this part of your overall planning. You need to identify your customers, assess their needs, and determine how your business will fulfill those needs. How will this data shape your pricing? What is your potential market share? Outline how you will market your business to reach that target demographic.

Financial projections

It takes a significant investment of capital to get any business off the ground, and franchises are no exception. Investors and lenders will be most concerned about turning a profit. They don’t want to sink funding into a business that will end up folding like a paper airplane at the first sign of trouble.

Your plan should outline a realistic budget that includes both startup costs and operating costs. These financial projections should cover your cash-on-hand, franchise purchasing fees, startup costs and operational costs. The budget should cover operational costs over a three- to six-month period.

Discuss how much capital you’ll need to cover these costs until your business turns a profit. You also need to demonstrate the accounting and inventory control systems your franchise will use. Include income statements, cash flow projections, and data sheets to project how your business will do once it opens its doors. Financial projections should be conservative and take into account as many variables as possible.

Getting to work

There are many great resources available to help you structure your business plan so that it conveys the message you intend with confidence. Franchise business plan templates can help you see what works best and how to put your vision into the right words. You can pick from assorted stock images, fonts, colors and other design elements to make it visually appealing and reflect your franchise’s brand voice.

If you’re not a professional designer,  Lucidpress  can help you start out on the right foot. We offer plenty of templates suited to meet your business document needs. Our intuitive online editor makes it easy to design traditional printed documents or embrace the virtual realm with interactive digital documents. Check out our  template gallery  for a dose of inspiration, then sign up for a free Lucidpress account to take one for a test drive.

Your brand matters. If you’re ready to build your franchise brand into a consistent, compelling force that drives your business, this guide will show you how to get started.

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What is franchising learn the basics of this popular business method.

🕒 Estimated Reading Time: ~5 minutes

You’ve seen the slogans:

“Be in business for yourself, but not by yourself.”

“When you succeed, we succeed.”

“We’ve been successfully putting people like you in business for 16 years!”

“Be your own boss; we’ll help you get there.”

You want to run a business and have heard about franchising—and you're intrigued, but you aren’t sure if a franchise opportunity is the right choice for you. You’re in the right place. This page will give you an overview of what franchising is, giving you a better foundation of knowledge as you begin your journey towards (potentially) being a franchisee. 

The Origin of Franchising

Commonly when people think about the beginnings of franchising, the company that comes to mind is McDonald’s, but franchising has older roots than the fast food giant. 

The modern-day concept of franchising is widely believed to have originated in the 1850s with Isaac Singer. Singer was seeking a way to distribute his sewing machines outside of his immediate area, but he also wanted to instruct customers how to properly use them.

Since he couldn’t be in more than one place at once, he began selling licenses to selected entrepreneurs in different parts of the country. This business tactic proved to be the predecessor of the current franchise agreement. 

• What is Franchising?

According to the International Franchise Association (IFA), franchising is defined as:

A contractual relationship between the franchisor and the franchisee in which the franchisor offers or is obliged to maintain a continuing interest in the business of the franchisee in such areas as know-how and training; wherein the franchisee operates under a common trade name, format or procedure owned by or controlled by the franchisor, and in which the franchisee has made or will make a substantial capital investment in his business from his own resources.

Simply, a franchise is the right or license granted by a company (the franchisor) to an individual or group (the franchisee) to market its products or services in a specific territory or area.

How Does a Franchise Work?

In a franchise business setup, franchisees gain access to a franchisor’s business system, know-how and experience in exchange for their monetary investment and personal labor. This way, the franchisees can shorten the learning curve that comes with starting a business. It’s a way for franchisees to avoid a significant portion of the time and money spent that typically comes along with developing a business idea.

On the other side of the deal, by licensing out its business system and pledging support to franchisees, the franchisor allows itself the opportunity to expand into areas it may have had difficulty expanding to without the additional money and manpower.

To succeed as a franchise owner, regardless of the type of franchise you choose, you must be able to follow the operations manual and operate the business according to provided guidelines. If following a prearranged business plan doesn’t sit right with you, then a franchise business may not be for you. 

Franchise Business Models

The two most common forms of franchising are product distribution and business format.

In product distribution franchises, franchisees sell or distribute the franchisor’s products through a supplier-dealer relationship. The franchisor licenses its trademark and logo to the franchisees but typically does not provide them with an entire system for running their business. Dealers are a typical form of product distribution franchises. The industries where you most often find this type of franchising are: automobile services, soft drink distribution, equipment dealers, and gas stations.

In business format franchises, the franchisor licenses their brand to a franchisee for use with a predetermined way of conducting business. Franchisees, after they have signed the franchise agreement, are given access to not only a franchisor’s product and/or service, but also their trademark(s), and their complete method for conducting the business itself. This method includes items such as training, computer systems, marketing plans, operations manuals, and more. Most franchises available are business format opportunities.

A Very Common Business Format

Despite its popular association with food, business format franchising is extremely diverse and not confined to a narrow range of business segments. Name an industry and there’s likely a franchise in it. There are over 3,000 franchise concepts operating in the United States.

Also, while it’s true that the most popular franchise businesses such as McDonald’s and Subway have outgrown their humble beginnings and are now huge entities—operating thousands of units in numerous countries, the vast majority of franchise businesses are truly small businesses. Most franchise systems have fewer than 100 units total. 

Researching Franchise Opportunities

Franchises exist just about everywhere and offer many options that can be challenging to narrow down. The Internet is a good place to start your research, as are print directories, exhibitions or tradeshows , business-specific publications, and franchise consultants .

Once you find some choices that are appealing to you, the following considerations are some starting evaluation points:

• Is there a strong trademark name or brand?
• How long has the franchised business been in operation? How many franchise units are there?
• If it's a newer franchise, is it a fad that could quickly lose relevance? How has it been tested?
• What kind of support (management, technical, etc.) does the franchisor offer? Is there an additional cost
• Does the territory offered have protections?
• What is the competition and how do prices of the products and services compare to competitors?
• Will the source of production materials be guaranteed in the future, if applicable?

To go deeper with your evaluation of a franchise, or a small list of franchises, request the FDD for the franchise.  An FDD (franchise disclosure document) is a comprehensive document that outlines the history of the business, all the franchisees in a system, turnover rates, terminations, fees, rules, restrictions, and numerous aspects of that particular franchise. More on the FDD can be found here .

Suggested reading:

• The Ultimate Guide to Franchising
• The Benefits of Franchising
• Choosing the Most Profitable Franchise for You
• 11 Key Steps in Opening a Franchise
• Franchises vs. Business Opportunities
• The Cost to Start a Franchise and Financing Options
• Basics of the Franchise Disclosure Document (FDD)
• Creating a Business Plan for Your Franchise
• Completing and Signing a Franchise Agreement

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How to Create a Franchise Business Plan

A business plan is a document that outlines the goals, strategies, and operational plans of a business. In short, it is a roadmap to success . Not only is it an essential tool for an aspiring business owner to get started, but it serves as a benchmark for measuring progress and making adjustments as needed down the road.  

If you are planning to purchase a franchise, creating a thorough and effective business plan is essential to your success. Not only will it help you prepare for what lies ahead, but it is also a requirement if you are looking to secure financing. In fact, a well-written business plan can make the difference in whether a lending company approves your loan.    

Information You Need to Write a Compelling Business Plan  

A business plan is not something you can just jot down in a few minutes. Rather, you will need to spend intentional time compiling information and developing a strategy that will form the blueprint of your business. 

Here are several items you should consider including in your franchise business plan: 

• Relevant work experience
• Insights from existing franchisees 
• Statistics within the industry 
• Current industry news 
• Updated data related to local economy 
• Local marketing tactics  
• Franchise Disclosure Document (FDD) 
• Additional franchisor literature 
• Necessary permits and licenses 
• Market area map that includes all current and potential competitors

What Should Be Included in a Franchise Business Plan?  

Clearly, forming a business plan requires a diligent effort. However, if you are looking to own a franchise business, you won’t need to start from scratch since the franchisor has already compiled much of the information you will need. While you still need to work hard to put together a solid business plan, there are several templates available for guidance. No matter which template you choose, your business plan should include the following sections: 

Executive Summary 

This section will provide a mission statement for the business and then explain how your business will achieve its goals . Someone should be able to read the executive summary and know the purpose of your business and the potential it has in its given market. 

Business Description

The information provided here should be thorough. Fortunately, Item 1 in the Franchise Disclosure Document (FDD) will give an overview and history of the franchise you are seeking to buy . Furthermore, you should include details related to products and services, market and competition, business operations, and the potential challenges your business might face. 

Operations & Management Summary

This section will explain how things will get done in the business . It should outline the structure of the management team and include specific instructions related to the day-to-day operations of the business. Team members should be able to refer to the operations part of the business plan as they aim to implement the business’s strategies. 

Market & Industry Analysis

You will need to provide an analysis on the market that you are entering, which includes: 

• A description of the marketplace
• What your competitors are doing
• Details that support your specific business strategy

Furthermore, you should also understand the industry along with its risks and opportunities, so that you can build strategies that take advantage of the opportunities while mitigating potential risks.

Competitive Analysis

You shouldn’t start a franchise business with your blinders on. It’s important to know what your competitors are doing and how they are performing . Evaluating your competitors is a way to validate the predictions you have for your business’s performance . By this point, you have probably already gathered all the information you need about your competitors. Ensure that you perform a thorough analysis of this information as it will guide you in your business decisions.  

Marketing & Sales Plan

What you include here is dependent on which franchisor you work with since you are obligated to use their sales and marketing tactics. You will want to know the process for targeting new customers and how much flexibility you have to implement your own marketing strategies . You should also provide specific information related to the initial marketing plan and what the ongoing marketing strategy will look like. Finally, it’s important to explain how the franchisor will support you in these efforts .

Financial Plan

This section should thoroughly outline the financial details of your business: where it has been, where it currently is, and where it’s going . The data will include: 

• Business costs 
• Current funding for the business 
• Expected future financial needs  

While the actual financial performance of each franchise unit will vary, the Franchise Disclosure Document (FDD) provides information that is helpful for making financial projections. 

• Item 19 includes the financial performance representations (FPR) for a prospective franchisee 
• Items 5-7 have helpful financial information related to the initial fees and investment needed

Speaking with existing franchisees is also an integral part of this process. 

Pro forma is another part of the financial section, and it includes projections of future expenses and revenues , which you can corroborate with the following business information:  

• Balance sheet
• Profit or loss statement 

Perhaps it goes without saying, but be sure to update your business plan if something changes. It is not a document you should finish and then put away to gather dust. It is a valuable resource, and you should use it at every stage in your business if you want to be successful.  

Ready to Get Started With Your Franchise Business Plan?  

Creating a thoughtful and detailed business plan is key to each step of the franchising process. If you are ready to get started with owning a franchise business, then FranNet is here to help. Our franchise consultants will provide the resources, support, and guidance you need to make an informed buying decision. Schedule a free consultation today! 

Mar 17, 2023

Business Ownership , Buying a Franchise , Finance

What is a Franchisee vs. a Franchisor?

Published: September 27, 2021

For individuals who dream of owning a business, becoming a franchisee is a good place to start. For people who already own a business, taking on the role of a franchisor can help expand and grow your operations into new locations.

But when it comes to franchisee vs. franchisor, what are the terms of ownership? Who’s responsible for marketing materials? Can a franchisee make their own rules for their store, or do they have to abide by the franchisor’s existing regulations?

Let’s dive into the differences between a franchisee and a franchisor — from what each term means to the roles and responsibilities for both parties.

What is a Franchisee?

A franchisee is a person who pays fees — both royalties and upfront costs — to a business owner, called the franchisor, to operate a business under the franchisor’s trademarked name and business systems.

Both franchisors and franchisees take on various benefits, risks, and responsibilities when they form working relationships with one another. The franchisee must adhere to the franchise, so following the contract and operating under the provided guidelines are a must.

Franchisee Roles and Responsibilities

1. upholding brand reputation.

First and foremost, the actions of a franchisee can and will reflect on the entire company. For example, if a customer is treated poorly or a franchisee has an outburst, this could lead customers to boycott other company locations — as the franchisee’s actions are directly tied to the brand as a whole.

2. Hiring and Training Employees

The franchisee will need to put out job postings, review applications, interview prospective candidates, and train new employees — but the franchisor may assist with this by providing training materials or hiring guidelines.

3. Following Rules and Guidelines

The benefit to becoming a franchisee is that you save money on fully developing a business from scratch — but in return, you must be willing to abide by the franchisor’s vision. If that means wearing a specific uniform, performing inventory via a specific protocol, or advertising through provided signage, you need to follow those expectations.

4. Finding and Leasing a Building

The franchisee will need to find the location for their business and pay the leasing fees. A franchisor may also help with finding a good location for the franchisee. The franchisor will also likely provide necessary fixtures, furniture, and store signage for the new location.

5. Manage Day-to-Day Activities and Performance

The franchisor will certainly take on some risk if a new business fails, but the burden of turning it into a successful company ultimately comes down to the franchisee.

The franchisee will manage the daily activities that go into keeping a franchise location operational — including opening the store, overseeing sales, and locking up at the end of the day. The success or failure of a specific location ultimately relies on and heavily impacts the franchisee.

6. Paying Ongoing Fees to Franchisor

The cost of operating, using an existing business’ brand, business model, and operational systems occurs in the form of royalties. Franchisees will pay royalties to the franchisor monthly. In fact, even if a franchisor goes into bankruptcy, franchisees are typically expected to continue operating and paying royalties.

What is a Franchisor?

A franchisor is a company owner that owns the rights and trademarks of the company and its business model, systems, and products.

The franchisor sells the rights to operate under its brand, sell its products, and operate following its business model to other business owners without losing control of the company. While the franchisee handles the day-to-day of their specific store, a franchisor must look at the bigger picture and plan for the future of the brand based on all of its franchisees.

Franchisor Roles and Responsibilities

1. creating a brand and scalable business model.

Before anyone can enter a franchise, there needs to be an established brand and a scalable, sustainable business model. The franchisor will need to put forth the financial and creative labor to make this happen before the business can begin to expand through franchising.

2. Managing the Brand and Its Products or Services

The franchisor will need to handle the overall brand image — from the tone to the business systems, plus the products and services. For example, a franchisor would be responsible for creating a limited-time product that will be sold at all of the company’s locations.

3. Providing Support

A franchisor will need to offer ongoing support to its franchisees. If a franchisee needs help with inventory, new-hire training, or advertising, the franchisor will need to provide the necessary guidance — even years into the franchise agreement. In exchange, the franchisor receives ongoing royalties from all of its franchisees.

4. Creating Marketing Materials

Although franchisees are responsible for how they advertise and market themselves locally, the franchisor needs to offer the materials and overall guidance for how franchisees should do this. Franchisors are also responsible for national marketing.

For example, the franchisor behind a major fast-food restaurant chain will be responsible for TV commercials and offer signage for franchisees to hang in their windows or general guidelines for what to put on their outdoor sign displays.

5. Vetting and Training Franchisees

Franchising a business comes with financial risks if the location fails. Someone might come to you with all the money to get started but lack the right attitude to work with employees and customers. Or maybe, they don’t have experience with day-to-day business operations.

The franchisor needs to thoroughly interview franchisees to make sure they are cut out to run a business, then they can provide successful candidates with the training and support needed to help the business grow and profit.

6. Planning for the Future

Franchisors need to know where they want the business to go moving forward. The franchisor is responsible for the overall success of the brand, so they must know how to continuously improve operations, expand the business model, and innovate upgrades or new products and services to fulfill consumer needs.

Types of Franchises

There are several types of franchise structures, but here are a few of the most common franchise types.

Business Format Franchise

The business format is the most prominent category of franchises — and it’s likely what you think of when you hear the term "franchise" itself.

In this type of franchise, a franchisor provides the brand, the products, and the operational and marketing systems. Many restaurant chains, retail stores, and gyms follow this style of franchising. New stores open under the training and guidance of the franchisor.

The new store takes on the trademarked name, brand colors, cash register systems, marketing signage, and products. Employees are trained in a way that a traveling customer can generally expect the same experience at any given franchise location — no matter what city they're in.

Product Distribution Franchising

This model of franchising focuses solely on the product. Franchisees may sell the products, but they won’t necessarily follow a franchisor’s operations and business model.

For example, many retailers sell LG appliances, but each retailer follows different business models. They are simply franchising the LG products. Car parts, computers, and farm or construction equipment are all common examples of product distribution franchising.

Job Franchising

Job franchising is a small-scale type of franchising and is often common for companies selling services. For instance, a franchisor may start a daycare business and will hire a few daycare providers to operate under the small business’ brand. Common examples of job franchising include local lawn care services, house cleaning companies, and plumbing businesses.

Franchisee vs. Franchisor

As you can see, there are many differences between a franchisee and a franchisor. The franchisee is a small business owner that handles the day-to-day management of a specific location.

The franchisor oversees the big picture for an overall brand and all its franchisees. Each party owes the other something, whether that be royalties from the franchisee or ongoing support and rights to existing branding from the franchisor.

Examples of Franchisees and Franchisors

Many of the biggest examples of franchisees and franchisors are found in the food industry. But everything from gyms to hotels to movie theaters to retail shops can all operate under franchises.

Some of the most well-known franchisors in the food business include McDonald’s, KFC, Olive Garden, and Dunkin’.

Popular franchisors in retail include Bath and Body Works, Plato’s Closet, and Gap, Inc.

Other franchisors in the fitness industry include Rumble Boxing, 9Round, Pure Barre, Club Pilates, and Anytime Fitness.

Hotels are another popular franchise opportunity. Major hotels like Super 8, Hampton by Hilton, Hyatt Hotels & Resorts, and Days Inn operate under franchises.

One unique example of a franchisee, rather than a franchisor — existing from a nearly bygone era — is Blockbuster. The franchisor declared bankruptcy and closed in 2010, but to this day, one franchisee’s location exists in Bend, Oregon.

Franchises Bring Benefits and Risks to All Parties

There are many benefits and risks for both the franchisee and franchisor. They both depend on one another for success, but there are instances where either can fail while the other succeeds.

Ultimately, a successful franchisee and franchisor will need to be communicative, innovative, and in tune with current trends to continue to grow. Plus, companies that focus on high-quality products and top-notch customer service are more likely to succeed.

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What is franchising? Definition and examples

Franchising is an arrangement in which the franchisor gives the franchisee the right to distribute and sell the franchisor’s goods or services and use its business name and business model for a specified period, and possibly covering a geographical area.

The franchisor is the owner of the business that provides the product/service, while the franchisee is the person who receives the rights to use the franchisor’s business name, model, etc.

Franchising exists in several forms. According to the Franchising Council of Australia, the most common way franchising is identified is in the “business format franchising”.

In business format franchising the franchisee has the right to sell the franchisor’s goods or services, but also uses the franchisor’s designs, quality control, and training, and also benefits from his/her advertising and promotions, accounting systems, and operating procedures.

Often the supplier of the franchisee’s goods or services is the franchisor. If it is a hotel or travel agency business, the franchisee is also part of the franchisor’s worldwide reservation system.

Examples of franchising relationships include:

• A manufacturer-to-retailer arrangement – as occurs with car vehicle dealerships. The franchisor supplies the dealership (retailer) with vehicles.
• A manufacturer-to-wholesaler arrangement – common with soft drinks companies. The franchisor grants the franchisee a license to manufacture and distribute its product(s). This kind of franchise is common when the franchisee is in another country.
• A wholesaler-to-retailer arrangement – the franchisor (wholesaler) sells products to the franchisee (retailer) who sells them to the general public. This kind of arrangement is common in cooperatives, where the franchisee is, in fact, part of the cooperative (the cooperative is the franchisor).
• A retailer-to-retailer arrangement – the “classic” business format franchise. The franchisor markets a product (or service) through a network of franchisee retailers.

Franchising is a huge sector of the economy

In the USA, as of 2005, there were 909,253 established franchised businesses. They generated over $880 billion for the national economy and accounted for 8.1% of all private employment (non-farm), a total of 11 million jobs.

According to the International Franchise Association, the franchise industry added 25,060 jobs in the USA in October 2013, representing one-fifth of all new jobs for the month.

Best franchises today

10 best franchises to buy & own 2024, according to blog.xoxoday.com :

• McDonald’s – startup costs, $1.3 to $2.3 million.
• Subway – startup costs, $187k to $507k.
• Dunkin’ Donuts – startup costs, $110k to $1.6 million.
• Ben and Jerry’s – startup costs, $113k to $475k.
• Ace Hardware – startup costs, $292k to $1.6 million.
• 7-Eleven – startup costs, $54k to $1.16 million.
• The UPS Store – startup costs, $218k to $477k.
• Anytime Fitness – startup costs, $390k to $970k.
• Supercuts – startup costs, $150k to $312k.
• Jani-King – startup costs, $100 to $220k.

What are the benefits of franchising?

Pros for the franchisor:.

• The business can expand using other people’s money, which not only provides another income (regular royalty payments) but also allows the franchisor to expand more rapidly.
• The franchisor may have several sources of income, such as franchise fees, franchise royalty fees, training fees, service fees, advertising and franchise marketing fees, rebates from suppliers, and the sales of products and supplies to the franchisees.
• Being able to open in multiple locations more rapidly gives the franchisor a competitive advantage over other businesses selling similar products or services.
• The franchisor brings into the company people (franchisees) who are entrepreneurs, full of motivation to succeed.
• The franchisor needs a smaller central organization compared to a business that owns all the branches. In other words, he or she does not need such a large head office.

Pros for the franchisee:

• A greater chance of succeeding. Franchising businesses have a much higher success rate than others for people who start in business. However, Entrepreneur disputes this.
• Get things started more quickly. Depending on the arrangement, in many cases the franchisor comes and sets the whole thing up, including decorating, shelving and equipment.
• Initial training and then ongoing training.
• Ongoing support.
• Help in finding the right premises.
• Being part of a known brand. In many cases, benefiting from regional or national advertising campaigns.
• Group purchasing usually results in lower costs.
• Adopting a proven business model.
• Many franchisors provide customer leads through websites and centralized call centers.
• Being part of a network of franchisees.

Disadvantages of franchising

Cons for the franchisor:.

• Loss of ownership – the franchisee has put up money and becomes a kind of partner in the business. A business that owns all its branches has not lost ownership.
• Loss of territory. In most cases the franchisee will be granted an exclusive territory. If it is not fully exploited, there is not usually much the franchisor can do.
• You may not be suited to be a franchisor. The resources and skills required are not the same as those needed to manage employees in a branch. You have to be able to lead and motivate independent entrepreneurs. Success as a franchisor thus depends heavily on selecting the right franchisees who are capable and committed to upholding the business’s reputation and standards.
• Confidentiality – a franchisor will have to divulge more confidential information about the business to franchisees than to employees. Even though a franchisee should have signed a confidentiality agreement, monitoring the provisions of the contract is not easy, and enforcing them can be expensive.

Cons for the franchisee:

• Lack of independence – goods usually come just from the franchisor, the premises can only be decorated in a certain way, the range of products available for sale are restricted, etc.
• Lack of control over prices – the company may decide on a nationwide discount on products that may not work in the franchisee’s market.
• Generally being at the mercy of the company regarding virtually everything. The franchisee must adhere to the franchisor’s stringent operational guidelines to ensure brand consistency across the board.
• Long-term growth – the franchisee’s ambitions regarding becoming a large business one day may be limited by the franchise setup and the franchisor’s aims.

“Franchising” – a derivative of “franchise”

The word “franchising” is a derivative of “franchise.” There are many other derivatives. Let’s take a look at them, their meanings, and how we can use them in a sentence:

Franchise (noun)

A license granted to an individual or group to operate a business under a larger company’s brand and sell its products or services. Example: “The entrepreneur bought a franchise of a popular fast-food chain.”

Franchising (noun)

The practice of using another firm’s successful business model. Example: “Franchising has allowed her to expand her business across the country rapidly.”

Franchisee (noun)

An individual or company that holds a franchise for the sale of goods or the operation of a service. Example: “As a franchisee, he was required to adhere to the franchisor’s strict operating guidelines.”

Franchisor (noun)

A company that grants the license to a third party for the conducting of a business under the franchisor’s marks. Example: “The franchisor provided marketing and training support to all of its franchisees.”

Franchisable (adjective)

Capable of being franchised or suitable for a franchising agreement. Example: “Her unique restaurant concept was franchisable and attracted several potential investors.”

Franchisee-owned (adjective)

Describes a business outlet that is owned by a franchisee. Example: “The franchisee-owned stores showed more rapid growth than the corporate-owned locations.”

Franchise-wide (adjective)

Pertaining to or involving all the franchisees in a franchise system. Example: “The franchise-wide sale attracted a large number of customers over the weekend.”

Franchise agreement (noun)

A legal, binding contract between a franchisor and franchisee, outlining the terms of the franchise. Example: “Before opening her store, she carefully reviewed the franchise agreement.”

Franchisor-led (adjective)

Directed or initiated by the franchisor. Example: “The franchisor-led initiative aimed to improve customer service across all outlets.”

Franchised (verb – past tense)

Granted a franchise to someone. Example: “He franchised his coffee shop brand to several entrepreneurs in the region.”

Franchising (gerund/verb present participle)

Operating a business under a franchised structure. Example: “Franchising his business was the turning point in his career.”

Franchise-holder (noun)

A person or entity that owns a franchise. Example: “The franchise-holder was responsible for local staffing and daily operations.”

Franchise operation (noun)

The way a franchised business runs. Example: “She was new to the franchise operation but eager to learn.”

Franchise royalty (noun)

Regular payment made by a franchisee to the franchisor, usually based on a percentage of gross sales. Example: “Part of the franchisee’s expenses included a monthly franchise royalty fee.”

Non-franchised (adjective)

Not related to or part of a franchise. Example: “They decided to keep their restaurant non-franchised to maintain complete control over operations.”

Video – What is Franchising?

This interesting video presentation, from our YouTube partner channel – Marketing Business Network , explains what a ‘Franchising’ is using simple and easy-to-understand language and examples.

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What Is a Franchisee? (+Benefits and Responsibilities)

October 18, 2019

by Mary Clare Novak

You can’t drive more than a few blocks without passing some sort of franchise.

McDonald’s, Planet Fitness, a UPS Store - there have got to be hundreds, if not thousands, of these stores in America. While all of these franchises have a headquarters somewhere, that single unit of people and source of leadership knowledge could not possibly keep all of the storefronts across the country in working order.

That’s why they allow franchisees to do this for them.

What does it mean to be a franchisee?

A franchisee is a small business owner that operates a franchise. For a fee, they are given permission to conduct business activities using a franchisor’s branding, business plan, and other ownership knowledge.

While owning and operating the franchise, a franchisee must abide by certain standards set by the franchisor, which is the individual that gave them permission to operate the business.

Understanding franchisees

Franchising is a common way of doing business. In fact, a new franchise opens every eight minutes of every business day. To better understand franchises and the appeal to aspiring small business owners, let’s take a look at some of the benefits associated with owning one, the relationship they have with the franchisor, and the responsibilities of a franchisee.

Benefits of becoming a franchisee

The franchise situation benefits both the franchisee and the franchisor in different ways. The franchisor gets more geographical reach, further exposing their company's brand name and product or service, not to mention the fees associated with owning a franchise fill their pockets.

The franchisee’s benefits are a bit different.

Own their own business

The first benefit of becoming a franchisee is fulfilling that dream of owning your own business. A lot of people aspire to become a small business owner, but not everyone has the know-how. The beauty of franchises is that you don’t necessarily need to know everything about starting a business. That’s all taken care of by the franchisor. You just need to know how to operate it.

However, there are certain traits necessary to owning and operating a business. 

Use a successful business model

If Starbucks’ business plan wasn’t working out, you wouldn’t see them on every block. Another great benefit of owning a franchise is the stress-relieving knowledge that the business plan is already perfected and has already succeeded time and time again.

This also means that when you open your franchise, you will already have a solid customer base waiting to buy your product or service. Sure, there are going to be some franchises that close, but that is usually the fault of the franchisee.

Invest a smaller amount

Certain franchises cost just a fraction of what it does to start, own, and operate a business with an original model. With franchises, there is a lot less financial risk and mistakes to be made, so you won’t be spending wasted money.

More appealing to investors

Even though the initial investment of a franchise is smaller than that of another type of business, owners might still need some help with business funding . That is perfectly fine, mostly because investors are more likely to support franchises than other businesses. The successful business model and already established consumer equals money, and that means a solid return for the investor.

Support from franchisor

Franchisors want to keep their successful business model afloat, so they will offer support to franchisees when needed. They can offer help, training, or other types of support to make sure your particular franchise is flourishing in the markets.

Franchisee-franchisor relationship

Essentially, the franchisee-franchisor relationship is similar to a mentee-mentor relationship. As stated above, the franchisor will offer support in regards to business strategy, operations, hiring , training, advertising, and so on.

However, all of this doesn’t come for free. In exchange for the rights to start a franchise and the guidance that comes along with it, the franchisee must pay an initial franchise fee as well as other ongoing fees.

Franchisee responsibilities

The first responsibility of the franchisee, which they need to complete before they even hold the title, is financial. As stated above, to start a franchise, an initial franchise fee must be paid, as well as ongoing marketing and royalty fees.

The franchisee is required to abide by the business model and marketing standards set in place by the franchisor. The consistency in operations and continuous use of the business model is what helps maintain and even further establish the brand, and therefore the franchise as a whole. While the franchisor will handle high-level reputation management , the franchisee is responsible for upholding the brand’s image at a lower level.

Lastly, and this one may seem obvious, but in order for the arrangement to work, the franchisee must invest the right amount of time and attention to ensure the franchise is a success.

Don’t fear franchising

Starting your own business can be a scary venture. There are plenty of hurdles to jump, people to disappoint, and mistakes to make. Opening your own franchise is a great option for people who have the know-how for operating a business, but not so much about starting one.

Does this interest you? Check out our resource on how to start a franchise to get things going!

Mary Clare Novak is a Content Marketing Specialist at G2 based in Burlington, Vermont, where she is currently exploring topics related to sales and customer relationship management. In her free time, you can find her doing a crossword puzzle, listening to cover bands, or eating fish tacos. (she/her/hers)

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Franchising

Last updated 22 Mar 2021

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Franchising arises when a franchisor grants a licence ( franchise ) to another business ( franchisee ) to allow it trade using the brand / business format.

The franchisor is the business whose sells the right to another business to operate a franchise – they may run a number of their own businesses, but also may want to let others run the business in other parts of the country.

A franchise is bought by the franchisee. O nce they have purchased the franchise they have to pay a proportion of their profits to the franchiser on a regular basis. Depending on the business involved, the franchiser may provide training, management expertise and national marketing campaigns. They may also supply the raw materials and equipment.

Buying a franchise a good way of an individual setting up a business because:

• They do not have to establish themselves in the same as a sole trader might have to.
• They will have the support of a tried and tested business model, often with a national marketing campaign behind them.

Benefits to the Franchisor

The main advantages to the franchisor of growing a business using franchising include:

• A classic growth strategy for a proven business format
• Enables much quicker geographical growth for a relatively low investment
• Still have the option to open locations that are operated by the Franchisor
• Capital investment by franchisees is an important source of growth finance

Benefits to the Franchisee

The main advantages of setting up as a franchisee include:

• The franchisee is given support by the franchisor. This includes marketing and staff training. So starting a business in this way requires less expertise and is less lonely!
• The franchisee may benefit from national advertising and being part of a well-known organisation with an established name, format and product
• Less investment is required at the start-up stage since the franchise business idea has already been developed
• A franchise allows people to start and run their own business with less risk. The chance of failure among new franchises is lower as their product is a proven success and has a secure place in the market

Drawbacks to the Franchisee

The potential disadvantages of setting up as a franchisee are:

• Cost to buy franchise – can be very expensive (hundreds of thousands of pounds).
• Have to pay a percentage of your revenue to the business you have bought the franchiser from.
• Have to follow the franchise model, so less flexible. You would probably be told what prices to set, what advertising to use and what type of staff to employ.

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