Franchise business how does it work

What makes The UPS Store so successful is it gives each individual an opportunity to grow with the network and just meet the challenges that are brought to them on a daily basis.

Every day gives us a new opportunity to help another person, to help another small business, to answer a question and to solve a problem. I love my customers.

I love my employees. I love every person, every face that comes into my store. I enjoy every day going into work and I can't see doing anything else for the rest of my life. I think that this franchise is so successful because of all of the resources that are available to us as center owners—we have marketing materials, we have so many different opportunities for help from the home office, and it just really makes for a great franchise.

I think the thing that makes this franchise successful is a number of things. First of all we have an outstanding system, we have a great product, a great brand, and we're able to attract dynamic people to run these centers and run the business. So I think when you put all that together it really provides for a winning combination. The thing I love about the franchise is that you have the UPS name backing you but yet you also have the autonomy to make your own decisions to promote.

I've gone from being an employee of someone else to being an employer of my associates. It's a big responsibility but it's exciting every day. It's very rewarding financially, professionally, and emotionally.

I have a large number of regular customers who are really, really appreciative of everything we do. In owning your own business you get your store up and running and you get employees that you can trust that are going to help keep your store running. This allows me to attend my two boys' ball games and also travel and do things with them so it has really changed my life for the better.

Continue your business success by applying for a new location. We're excited to help you along your journey toward small business ownership. Expect a response from us soon. Call Add to Calendar. Franchising How Does a Franchise Work? SHARE facebook twitter linkedin.

If you're interested in starting a franchise, learn about how the franchise model works. How does a franchise work? When it comes to starting a new franchise location, there are two main parties: Franchise owners i.

How to buy a franchise Before investing in a franchise location, franchisees typically have to go through an application process and secure funding. How to start my own franchise location?

Single-unit franchise ownership The single-unit model is the most common type of franchise agreement, and the easiest to understand. Multi-unit franchise ownership When single-unit franchise owners start seeing success from their original investment, they often move on to multi-unit franchise ownership. Master or regional franchise ownership In this model, franchise owners take on some of the responsibilities of the corporate brand by franchising out locations within their designated territory to other franchisees.

Ranked for over 30 Consecutive Years The UPS Store has been ranked 1 in the postal and business services category for over 30 years and remains in the top 5 overall for the fifth consecutive year according to the Franchise list. Kristin Howard Franchisee, Michigan.

Debbie Adams Franchisee, Kentucky. Jim George Franchisee, Illinios. Greg Murray Franchisee, Florida. See the Full Testimonial. Think long and hard about what "fits" your lifestyle.

Involve your family and any friends or associates you may want to pull into the business. Write down your objectives. Sometimes, just the act of writing things down helps you more clearly identify what you really want. Once you have identified the general category of business you want enter into, visit some of the franchising Web sites we have listed at the end of this article.

On most of these sites, you can search for franchises based on investment levels, type of business, and sometimes geographic region. Some even give you estimated breakdowns of what your total investments will be, as well as the ongoing royalty and advertising payments.

You can also use a franchising consultant to help narrow down your choices. When you get a list put together, begin contacting the franchisors for additional information. One thing to keep in mind throughout this process is that while you're shopping for a franchise, those franchises are also out there shopping for franchisees.

You'll be interrogated as much as you interrogate them. You both have to agree that it's a good match in order to proceed. Once you contact a franchisor for more information, these are the steps that will typically follow:.

The franchisor will send you brochures and other materials, and most likely request that you complete a questionnaire. You will proceed based on the outcome of that exchange of information. The Federal Trade Commission FTC requires this document be provided to disclose detailed information about the franchisor at least 10 days prior to any franchise purchase. That information includes:. Visit as many of the franchisor's existing franchisees as you can.

Meet directly with the owner of each establishment, and pay close attention to opinions of the franchisor. Ask the owners about the support they get on an ongoing basis, as well as the training and assistance they received when they first purchased the franchise. Did the franchisor help them with the location decision, and assist with initial set-up? What about the promotional efforts of the franchisor?

Does the individual franchisees benefit from their investment? Do they get any say in how the advertising dollars are spent or allocated? Are their earnings living up to their expectations? Did their total investment stay in line with what they were expecting? Ask specifically if they would do it again knowing what they know now.

These opinions are very important to your research into each franchise. Look for trends that might indicate overall dissatisfaction with the company -- and avoid those like the plague! Review the franchisor's business plan, operations manuals, and market analysis. Try to meet with the franchisor in person. Make a point to meet the franchising operations personnel with whom you will be dealing. Keep these questions in mind while you are meeting with them:. Take careful notes about each franchise opportunity you are investigating.

Make sure you understand all of their policies and have a good feel for the level of satisfaction their existing franchisees have. Then use this information to make your final decision.

Most likely, when you set out to buy a franchise you will need a business loan of some sort. To get a business loan, you will also need a business plan. Writing a business plan for a franchise, however, is slightly different from writing one for your own new business startup.

Not only do you have to detail the business strategy and projections of the franchise, you also have to detail the reasons why you are qualified to run the business. While the franchisors may provide some assistance in helping you get the financing you need, they probably won't provide much in the way of helping to write a business plan.

This is because they can't take the liability risk of helping you make projections on sales. If those projections fall short, there is the chance of a lawsuit. You may be provided with a template for a business plan, but this is usually provided after you have signed the agreement and gone into their training program. The template will still not provide any information about projected financial information.

That leaves you doing as much research into the market, and particularly the competition, as you can. Visit How Business Plans Work for some advice and assistance in writing a complete business plan.

Some of the differences you'll have to adjust for include building the franchise fee, royalties, advertising fees, and other franchise-related payments into the financial documents. Your accountant should be able to provide valuable assistance in this area.

There are many elements of the franchise agreement, as well as the franchise deal itself, that can benefit from the advice of an attorney.

These can include:. Your best bet is to use an attorney who specializes in franchises. Make sure your selected attorney is a member of this organization, not because it screens them in any way there are no membership requirements , but because the organization itself stays on top of franchise law and offers seminars and other current franchise information for members. Using an attorney who is a member would be a benefit.

Even though you may use an attorney for these areas, you may still want to brush up on the laws yourself. The Franchise Rule deals with the franchising contract and requires that the franchisor give full disclosure of earnings, company history, litigation, and key-officer experience levels. It also requires that contact information be provided for existing franchised units.

The rule does not, however, cover anything that happens after the contract is signed, such as problems with product availability, site selection, and placement of other units within the same geographical market. There are some groups pushing for uniform standards of conduct once the franchise agreement has been signed. The agreement deals with issues like who pays for brand reimaging, new signage, dispute resolution and database information.

National fair franchising legislation was also introduced. The legislation would provide franchisees with a right of action in federal court in the event that the corporate franchise violates any provision of HR It was sent to the House Subcommittee on November 17, It was tabled during the th Congress, but is slated for reintroduction in the th Congress.

There is bipartisan opposition to the bill in the Congress; however, organizations such as the American Franchisee Association highly support it. This is because business-loving people like to own a franchise, and there are many risks involved in starting a business from scratch. New businesses face a lot of challenges in the initial stages - make a brand name, make the new products ready for the market, and create an operational system.

It needs patience and hard work for many years to gain a position in the market. On the other side, franchising has many benefits over starting a business from scratch. These benefits include enough support from the franchisor and already existing brand name in the market. If this franchising concept interests you, and you plan to buy a franchise, it is necessary to understand the franchise model.

In this article, you will know the insights about how the franchising model works. A franchise is a kind of business owned by a person called a franchisee under the brand, trademark, and business model owned by a company called the franchisor.

In simple terms, a franchisee operates a business by using the brand name and trademark of a franchisor. So, both franchisee and franchisor have a commercial and legal relationship with each other.

In the franchise business model, the franchisee uses the brand name of a franchisor, and in exchange for that franchisee sells the products and services of the franchisor. Also, a franchisee pays the fee and signs an agreement with the franchisor.

After all the legal formalities, the franchisee can open a new branch of the company. Franchisee-Franchisor Relationship In the franchise business, a franchisor and franchisee hold a strong relationship responsible for the brand's success. Initially, the franchisor helps the franchisee by providing the training, marketing, product development, and sometimes offering loans.

As the relationship continues between the two, the franchisor provides enough support, so that the business of the franchisee grows continuously. This franchisee-franchisor relationship benefits both. The franchisee runs the business as they are holding it individually while getting the benefits of regular support from the franchisor. On the other side, the franchisor obtains a new branch and expands its business to a new location and area.

It gives franchisors to gain benefits without spending for the business at a new location. This franchising business also benefits the customers as they can get a big brand's products and services in their local area. Types Of The Franchisee Ownership Franchisee ownership is of the following types: Single-unit franchisee: A franchisee having a single branch of the franchise is called a single-unit franchisee.

This ownership is the most common type of franchise ownership. Multi-unit franchisee: When a franchisee is successfully running the branch, they can choose to open more branches from the same franchisor. Such franchisees who own more than one branch of a franchise are called multi-unit franchisees.

Multi-unit area developer: Multi-unit area developers are responsible for opening a specified number of branches in a specified area within a specific time frame. The franchises follow this approach to expand their footprints in the varied market. Market franchisee: Master franchisees are like the middleman between franchisee and franchisor. They are like multi-unit developers who are obliged to open a specific number of branches at any location in a certain time period.

But the only difference is that the master franchisee can sell the franchises to other franchisees too. Understand the Franchise Agreement and Related Sections A franchisee and a franchisor sign a legal agreement before starting the franchise business between them. Trademark Usage The main benefit of starting a franchise business is the right to use known trademarks.

Address the below two points while signing the agreement: Whether the trademark is in operation and well-known. Whether there is any restriction on the usage of these trademarks.

Franchise L ocation This section contains the areas where the franchisees have permission to open the branch.