Many people dream of owning their own business but are afraid of the risks Instead of starting a new business however one can buy a franchise A franchise is a license issued by a large usually well known company to a small business owner Under the license

Many people dream of owning their own business but are afraid of the risks. Instead of starting a new business, however, one can buy a franchise. A franchise is a license issued by a large, usually well-known, company to a small business owner. Under the license, the owner acquires the right to use the company’s brand name and agrees to sell its products. In return, the franchising company receives a percent of the sales.
A major problem for first-time business owners is finding reliable suppliers of the goods and services they need: equipment, raw materials, maintenance, etc. It is easy to choose the wrong supplier, and doing so can be costly. Buying a franchise eliminates much of this problem. Most franchising companies have already found reliable suppliers, and franchise contracts typically specify which suppliers are to be used. This protects franchise owners from the risk of serious losses.
Another advantage of a franchise is that it can save a new business a lot of money on advertising. Advertising one’s product to potential customers is a crucial factor in a business’s success. A franchise owner, however, sells an already popu- lar and recognized brand and also gets the benefit of sophisticated and expensive advertising paid by the parent company.
Finally, a franchise offers more security than starting an independent (nonfran- chise) business. The failure rate for starting independent businesses is very high during the first few years; the failure rate for starting franchises is much lower. Finding one’s own way in today’s competitive business environment is difficult, and buying a franchise allows an inexperienced business owner to use a proven busi- ness model.