Franchise Definitions ? | Articles Bright

A franchise is a network of businesses that belong to a group. The business group issues licences for individual businesses to market its own products or services. Most groups grant licences to operate in specific territories. A franchised business is usually owned by an independent business owner that either reports or participates in decisions affecting the entire chain.

Let?s pick for instance a car wash operation. A prospective owner / manager could face 2 options. He could start his own business and set up his own policies, service standards, equipment etc ? or he could choose to make his operation a part of a franchised network. The franchise option provides him often with decades of experience, detailed operation manuals, staff productivity guidelines, and countless other helpful resources. The biggest downside is that he gets a much less flexible business model, and he cannot simply change his range of services / policies easily.

The popularity of franchises has risen significantly in the last few decades in Australia. A whopping $130 billion a year is estimated to turnover in franchised businesses. There are many options on offer in a range of industries.

McDonalds is possibly the most successful network. With over 30,000 locations, $25 billion in annual turnover, 1.5 million employees, and 70 million daily patrons in 130 countries ? they are 2nd to no other chain. 33% of all Australian takeaway meals are served by McDonald?s. Starting in 1940 from 1 shop, it grew exponentially after changing their business model be based on mass production.

Different franchised networks have different degrees of exposure. New Zealand has the highest number of franchises per citizen, with over 400 networks operating and a population of three million. India, on the other end of the spectrum, is crippled with regulations and foreign ownership restrictions and therefore lags behind the rest of the developed world. China?s franchise industry has seen a huge increase in the last decade with over 2000 KFC locations opened, at double the pace of their rival ? McDonalds.

Australia franchise regulations require a 14 day cooling off period before entering an agreement and a full disclosure agreement submitted to the new operator. A strict code of conduct was passed in the mid-1970s to address many concerns the Government had about the new style of operations. This code is still the foundation of most relevant laws today.

Franchised shops & outlets enjoy a lower rate of failure in comparison to other businesses. Being part of a chain does pay off as the vast experience from previous setup attempts is handed to new owner / operators. Some new comers in the industry start off as part of a chain, and then proceed to build their own franchised chain.

Author and writer Suzie Snezner is a consistent writer for franchise opportunities a business which she has just written a comprehensive article about What is A franchise to help people have a complete understanding of this type of business.

Source: http://articlesbright.com/business/franchising/franchise-definitions

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