Franchising is one way to go into business for yourself, but at the same time, be part of an established company. It is a method of doing business, in which the franchisor grants you (the franchisee), the right or privilege to sell a product or service.
Franchising arrangements involve:
There are two main types of franchise arrangements:
Single Unit Franchise
The most popular and simplest franchise format, especially for independent entrepreneurs. The franchisor grants you the right to establish and operate a business at a single location.
The franchisor grants you the right to establish more than one outlet within a certain territory, such as within a suburb, city, province, or even country. Usually a set number of outlets must be up and running within a set period of time.
The franchisor grants you the right to not only operate an outlet in a certain territory, but also to sell sub-franchises to others within that territory. Although this arrangement allows a franchisee to expand, it is complex, involving the division of fees and royalties between parties.
Range of Opportunities
There are hundreds of different kinds of franchise opportunities. Five of the most popular franchise fields and some examples within each include:
Advantages and Disadvantages
As a franchisee, you purchase an established concept, ongoing training and support, and a proven system that has been developed, tested, and refined. You may be able to take advantage of large-scale centralized buying, or acquire financing that would otherwise be unavailable to you. However, you must also abide by strict terms and conditions (including the purchase of supplies, often at a higher markup), reporting and inspection requirements. The cost of services provided to you is usually based on your total sales revenue which can amount to 10% or more of your total revenue or an even larger share of your profits. These periodic payments are for royalties and advertising contributions.
Selecting a Franchise
Ask for a promotion kit from a particular franchisor. The kit will describe the company, its philosophy, history, and the number and location of outlets. Most kits also contain an application form that asks questions about your past business experience, the value of your net assets and other data. You must fill in this form in complete detail in order for the process to continue. Be sure to carefully look over all opportunities. Assess yourself, the franchisor, franchise, and market.
EVALUATING THE OPPORTUNITY: You
Have you done your market research? For example, what competition currently exists (franchise and non-franchise); five years from now will the population in your territory change and will you see a change in demand?
Canadian Franchise Association
Suite 300, 285 Skymark Avenue
Mississauga, ON L4W 4L5
National and local newspapers, trade shows and business opportunity shows. Periodicals and reference books, including The Franchise Annual. Visit the Canada/Manitoba Business Service Centre Business Library.
Canada/Manitoba Business Service Centre
250 - 240 Graham Ave
Winnipeg, Manitoba R3C OJ7
Toll-free (information): 1-800-665-2019
TTY Toll-free (hearing impaired): 1-800-457-8466
Web site: http://www.canadabusiness.mb.ca/
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.
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