A franchise is a common business model throughout the world. This method of running/owning a business involves the appropriation of another entity’s business model, business plan or the actual business itself with authorization. When acquiring a franchise one is bound by strict terms and conditions of the franchise agreement. In many cases, the corporate office will promote all the various franchises under collective advertising programs. While there is limited freedom in operating a franchise, the main benefit of acquiring a franchise would be that one is taking part in an established model for success. This eliminates the need for establishing and branding a new company in a competitive market.
The owner of the franchise (known as a franchisee) would be given leeway to hire employees and associates as he or she sees fit. Also, the franchisee would have access to the considerable resources the franchiser could provide during a period of business decline. (Example, the franchiser could provide discount coupons for the store in local newspapers) Purchasing a McDonald’s restaurant would be a prime example of a franchise agreement. The costs of a franchise vary from company to company. While the investment, start up and maintenance costs may be high the odds of succeeding with a franchise are greater than running a start up.