The franchise business has been around a long time; in fact they go back as far as the 1850’s. The notion of selling off a business or a part of a business in order to expand into new areas usually came from the lack of investment funds from the business owner.

While the business of franchising has grown over the years it all had to start somewhere. The concept of franchise businesses started...

Here is a sample of frequently asked questions answered by the CFA. See the Canadian Franchise Association for the full list.

What is a franchise?
Franchising is a business relationship where a franchisor (a company or individual who owns the franchise system) grants a licence to a franchisee (a company or person who contracts to use the franchise system) the right to use the franchisor's trademark, brand, operating...

Personal Liability and Obligations of Franchisee and Family Members

What entities and/or individuals will be responsible for performance of various obligations under the contract? If the franchisee is a corporation, will a personal guarantee be required, and if so, what obligations are covered? If the franchisee will execute the contract as an individual, does he or she have the right to assign the franchise to a corporation that he or she owns?

Becoming a franchisee is a commitment that you will likely be making for the long run. Therefore you will want to be certain that you make the most logical choice that you possibly can. In order to do this, there are some questions that you should ask yourself while choosing the type of franchise that is best suited to you.

1. Summarize your credentials
If you haven’t already, compile...

Franchising is a huge and growing part of the nation's economy. More than 300,000 franchised small businesses operating in the United States account for an estimated $1 trillion worth of income each year and provide jobs for some eight million Americans. Franchising has also entered the Internet era.

The franchising phenomenon is not limited to the United States. In England, for example, franchising is one of the fastest growing sectors of the economy.

How to Choose the Right Financing Option to Meet Your Goals

If you've decided that franchise or business ownership is in your future but you don't have enough available cash, or liquid capital as it is often called, now is a great time to explore your financing options. Learn more about the various types of financing that are available to you. Once you've learned about the wide variety of financing programs that are available and decided which...

The term “Franchising” has always had a very specific meaning and referred to a defined business model. When doing a recent article on franchising in the service industry, I noticed that it was an excellent illustration of the metamorphosis of the traditional franchise model. That traditional model; initial fee, royalties and advertising fees, just isn’t the standard anymore. The model has become very flexible and...

Financial

1. Have you and your spouse and knowledgeable family members discussed the idea of buying a franchise?

2. Are you in complete agreement?

3. Do you have the financial resources required to buy a franchise? If not, where are you going to get the capital?

There are a number of reasons to go into business for yourself. Maybe you are intrigued by the challenge of the entrepreneurship or maybe you want to get rid of the mundane routine of working for someone else. Nevertheless, the key to run a money-spinning business depends on the choosing the business opportunity that is right for you! In today's competitive world a number of businesses venture fail, fortunately the business franchise offers great opportunities for everyone be it the beginners or be it the seasoned business men.

Franchising commands a staggering 43% of the nation’s total retail sales and service dollars. It is an employment engine on fire, and produces wealth right through economic decline. You don’t need an MBA to succeed, and everyone is in it together to win. Franchising is the profitable muscle machine that plows through challenge and persistently produces success. And, it consistently achieves record growth across the nation and around the world.

If you’re intrigued by companies that are emerging as leaders in fast-growing industries like the green movement then you’ll be interested in learning about innovative franchise opportunities that let you tap into some of the hottest industries. Earth-friendly franchises, for example, cater to the growing interest in protecting the environment and provide you with the opportunity to own an in-demand, eco-conscious business.

How do you find a franchise with great returns?

A wise investor, whether he puts money in the stock market or real estate or even collectible figurines, always considers the return he can expect on his investment. This should also be true of franchise investments. Those investigating franchise opportunities should look carefully at the company’s potential ROI.

The first year of business poses many challenges, even for the most experienced of entrepreneurs. In buying a franchise however, one would assume it would be easy, after all, you have bought a system with standards and procedures in place designed specifically for the franchisee to follow so it should be a breeze right? Wrong! Like any first year of business there are many challenges to overcome.

"You know it's on their list somewhere after Wyoming, Alaska ... Canada," says Larry Weinberg, a Toronto franchise lawyer who recently co-chaired the American Bar Association's Annual Forum on Franchising in Toronto.

A trend appears to be emerging among U.S.-based franchisors to target the Canadian market first for international expansion. A slow-to-recover U.S. economy, combined with Canada's relative strength during the recession, seems to be luring franchise operators to Canada.

It's easy for an executive to say he is franchise focused, as Nigel Travis, CEO of Dunkin' Brands, told QSRweb.com in a story posted Monday. How franchisees perceive that focus can be another matter.

But Travis is living up to that statement, at least from the point of view of franchisees represented by the Dunkin' Donuts Independent Franchise Owners organization.

If a person is looking to start their own company and they're not sure what they want to do or they don't have a lot of experience, they should look into buying a franchise. A franchise is when an existing company (the franchisor) sells the rights to distribute its products, techniques, and trademarks to another person for a percentage of the gross sales.

Wondering if you should buy a franchise? Here are 7 reasons that should prove to you why franchising is a good investment:

Quickest Way to Own a Business
Other business ventures take a lot of planning, preparation, and time until you can fully implement your operations. But with franchising, you can have your own business in just a couple of months. You won't even have to exert too much effort because everything is already laid out for you.

Legal Documents Required of Franchisors

There are two official documents that a franchisor may use to comply with the FTC Rule-- the FTC Disclosure Document (FTC Document) and the Uniform Franchise Offering Circular (UFOC). The FTC document does not meet the requirements of most state disclosure laws, whereas the UFOC is accepted (with minor differences) in all states with franchise disclosure laws.

Investing in your own business can be one of the most critical decisions one will ever make. The challenges are enormous physically and emotionally. Even finalizing a decision to own one's own business is daunting in itself. Many budding entrepreneurs cop out early into the decision making process.

10 Advantages of Buying a Franchise

1) A Springboard to Entrepreneurship

Buying a franchise allows you to become an entrepreneur in less time, limiting the multiple barriers first-time business owners would face. Essentially, you are buying a “business in a box” – a turnkey operation that has been designed, tested, and proven by a team of industry experts.

Have you ever dreamt of owning your own business? Of course you have, it is something that many people would love to be able to do but in most cases this dream is clouded by the “what if” question - “what if it fails?”. The fear of failing prevents so many would-be entrepreneurs from taking the plunge. But is this warranted? Well, it’s sad to say but yes, statistically it is warranted - Up to 50% of new businesses fail within the first 2 years of trading.

As a franchise sales consultant and an individual who grew up with a franchise business (my family owned a Dunkin Donuts for over 2 decades) I am often asked what type of franchise business I would personally recommend to buy. Although all franchise business categories have their inherent advantages and disadvantages, my personal preference would be to buy a service related franchise concept for a number of reasons.

Are you entirely happy with your job?
A poll of more than 2,800 employees in the UK carried out for online learning provider SkillSoft has found that two-thirds go to work wishing they were doing something else!

As well as this, 6 out of 10 of these people are checking job listings and recruitment websites while at work, with half of them having their details registered with a recruitment agency, headhunter or online job service.

You should always know what you are getting into and this is a big must especially if you are thinking of signing that franchise agreement.  A mistake here or lack of foresight on your part would definitely cost you more than your last divorce.  So before you tie that knot, read between the fine lines and make sure to understand and adhere to everything written on the contract.

Even after one has made the initial decision to buy into a franchise opportunity, there is an endless checklist of things to consider before choosing ‘the right one.´

Recognized franchise expert and President of Finance and Development of Wireless Toyz; one of the country´s fastest growing companies; Richard Simtob recommends a cold, hard look at every one of his top 10 franchise selection criteria before making the leap.

Although the 2010 outlook calls for little industry growth, franchising remains popular. Experts say, however, that numerous factors must be considered in picking the right franchise to buy.

Bob Purvin, chairman and CEO of the American Association of Franchisees and Dealers in San Diego, says franchising can be a lucrative investment for those who do their homework.

CHICAGO (AdAge.com) -- Take your average seven-figure CEO and add a load of the company's dirty laundry. Put him in a funny suit while he meets some of his best frontline workers -- and screws up their jobs. At the end, he can give them raises, and address problems exposed along the way.

It's a classic redemption story -- the kind American TV viewers love -- and the premise for CBS's surprise hit "Undercover Boss," which scored 38 million viewers after the Super Bowl.

For an in-depth description of the word "franchising", a quick visit to 'The Wiki', is an order. But to many, when the idea pops into the head, there is a common thread: McDonald's! Yes, McDonald's is among the world's largest and most popular of franchises, with a daily customer base of around 47 million in over 31,000 stores. So how does one with enough capital and ambition get a piece of the action? Create and market their own version of the Egg McMuffin... uh, no!

CHICAGO (Reuters.com) - If you've ever envisioned yourself slinging hash or pouring coffee in your own restaurant, your dream just got a lot cheaper.

With revenues flowing more like molasses than water, franchisors are slashing fees in an attempt to entice would-be entrepreneurs to ditch their cubicles and strike out on their own.

With a new year approaching, now is an ideal time to reevaluate your future goals and aspirations. If the economic climate has put you in a holding pattern and you’re determined to make 2010 the year that you turn your hopes and dreams into action, then consider becoming your own boss. Franchise ownership enables you to get into business in a relatively brief period of time with an established concept that features a well-known brand and a proven business system.

If you have set your heart on that particular brand or product, then consider obtaining that business franchise. Though focus and determination is the key factors to the start up or expansion of any successful business plan, it is important to analyze the factors and the workings before taking the plunge.

If you were trying an aerial trapeze stunt for the first time, would you do it without a net and safety harness?  Probably not because chances are very good that you would fall. The same holds true for business ownership. If you’ve never been your own boss, doing it alone could be difficult, scary, and full of the unknown.

Going into the franchise business might be a very good idea for you as it is one of the popular methods of doing business today but when you do a search of the available franchise opportunities, choosing one among the hundreds might be a daunting task.

Franchising involves an almost symbiotic relationship between the franchisee and the franchisor.  The franchisee provides expansion, additional profit and increased brand recognition while the franchisor provides the basic know how, brand name, supply chain, and continuing support for the franchisee.  To pay for this instant business, the franchisee shells out an up front fee or a franchise fee for the use of the business system and the brand name.

Have you always wanted to start your own business but you didn't think you had the money? It is true, starting a business can involve a large capital investment; however, there are other ways to go into business without spending everything you have. There are a number of cheap franchises that require little money to start, and some will even provide financing with a down payment. There are several industries that are ideally suited for cheap franchises.

Franchising research is a dangerous business for potential Franchisees. The Franchisor can hold all the cards, unless you see the relationship for what it is!

Here are 4 tips that new Franchisees should follow when talking to possible franchise owners. Ignore these at your peril, but take them into account and you and the Franchisor can have discussions with the deck not stacked against you.

Like any other investment, purchasing a franchise is a risk. When selecting a franchise, carefully consider a number of factors, such as the demand for the products or services, likely competition, the franchisor's background, and the level of support you will receive.

Demand

Is there a demand for the franchisor's products or services in your community? Is the demand seasonal?

Industry Breakdown

So why should I be interested in franchising anyway?

The International Franchise Association (IFA) estimated that product and trade name franchising accounted for $554 billion in sales in 1992. This represents roughly 28% of all retail sales.

People decide to buy a franchise for several reasons. Franchises offer an established brand name and relatively easy access into a specific industry. Many companies that sell franchises will also help the owner along the way by providing franchise related training, money, or clients. This gives the franchise owner an obvious advantage over the average small business owner who must work by themselves to establish their business, name, brand, and product.

Jobs are still scarce, so the unemployed are reinventing themselves and becoming the majority of new franchise owners, industry sources say. The troubles in commercial real estate are making it easier by driving some landlords to negotiate — sometimes offering several months' free rent or paying for remodeling.

Living With Chains
For entrepreneurs looking to buy a franchise, here's one thing to prepare for: culture shock.

There are entrepreneurs. And there are franchisees. And they aren't necessarily the same thing.

In a sputtering economy and without any experience running a retail operation, Chris Parker is excited about prospects as he plans to open two more Sport Clips hair salons over the next two years.

His first Sport Clips franchise on the near North Side is making an operating profit after opening just more than a year ago and he anticipates double-digit growth this year, Parker said.

When considering the purchase of a franchise, it is important for prospective franchisees to understand the Franchise Disclosure Document (FDD) provided by the franchisor. The disclosure document provides all relevant information about the company including a history and overview of employees, as well as the franchise agreement which outlines...

You want to own a franchise, but you don’t know which ones are available and which one would be right for you.  The big question is: how do you ?

There are many places that advertise franchises for sale:

Want to buy a franchise opportunity? Great idea! Here is a high-level overview on what to look for:

Operating History – A long history of success is the #1 thing to look for. If many other franchisees have been successful over the years, your chances are probably pretty good that you will be successful too.

Investing in your own business can be one of the most critical decisions one will ever make. The challenges are enormous physically and emotionally. Even finalizing a decision to own one's own business is daunting in itself. Many budding entrepreneurs cop out early into the decision making process.

One of the greatest decisions of any entrepreneur is in the choice of franchise that you buy in to. Therefore, there is a lot of planning and researching that needs to go into the process before deciding on a final franchise.

You need to have goals to work towards. For example, think about why you want to start a business and what you expect to get out of it.

So, you want to own a franchise...

Before you buy your own franchise, there are two critical tests you have to pass:

1. Personal Inventory: Are You the Ideal Franchisee?
The most important test you must pass is a self-examination of your characteristics and desires, and whether or not they are compatible with franchising.

If you're thinking of starting your own business, you probably realize the risks and huge undertaking ahead. Once you've decided what type of business, you'll also need to decide how you will start. There are two possibilities:

1. You can start your own business from scratch.
2. You can buy a franchise of an already established business.

Franchise Business Buyer's Guide

- A great question to ask franchisors: "What traits do your most successful franchisees share?"

- Any franchisor who guarantees specific returns or asks for cash up front is breaking the law. Move on to your next prospect.

Today customers have access to greater amounts of information, faster than ever before. With pervasive social-media tools like Facebook and the current trend of “video snacking” with Web sites like YouTube.com , brand   managers are met with an ever-increasing number of threats to maintaining their brand’s image and credibility. This is particularly challenging for franchising companies.

The availability of information about franchises for sale on the internet has taken some of the wind out of the sails of franchise exhibitions worldwide, but cannot replace the person-to-person contact where sellers and potential franchise buyers can meet and interact on the spot.

Most franchise exhibitions also include a seminar program, held in parallel with the expo, so that visitors can learn about specific topics of interest in a structured format.

In addition to the many questions that you should pose to a potential Franchisor, and the many questions they should pose to you, there are several other considerations for you to determine your compatibility with a particular Franchise system. If you are going to be getting into business with someone with the goal of creating an outstanding future together, you should cover more bases than just the basic questions to understand how the business makes money.

Franchise industry regulation varies from state to state, and you should therefore do some extensive research into the laws that apply in your state. What is considered franchising by your state? What documentation does your state require of franchisors to help protect you?

"Traditional marketing says fill a need and you'll be successful. America has a huge need to eat healthy and no one's filling that need in the fast food market... not really." So says Jaynie Smith, author of Creating Competitive Advantage and president of Smart Advantage, Inc.

Smith is right about the huge need for Americans to eat healthy: According to the National Center for Health Statistics, 66.5 percent of adults are overweight or obese; 32 percent of adults obese.

The franchise industry consists of two main components:

1. Product and Trade Name Franchising
Product and trade name franchising includes automotive and truck dealers, soft drink bottlers, and gasoline service stations. These franchises are essentialy distributorships and as a group, they are far larger than the participants of business format franchising. Our site does not focus on this franchise form and instead, devotes much of its attention to business format franchising.

The franchise sector is expected to add about 36,000 jobs this year after shedding more than 400,000 last year, according to a forecast released by the International Franchise Association, based in Washington. It represents about 1,300 franchisors and 12,000 franchisees.

The recovery would be stronger if loans were easier to get, according to the association.

When you buy a franchise, you often can sell goods and services that have instant name recognition, and get training and support that can help you succeed. But purchasing a franchise is like every other investment: there’s no guarantee of success.

How do franchises work?

Well, franchises work but the problem is most people don't really know how much work they take and how much effort they really need to put in to make their franchises produce REAL profits right off the bat.

There are many different options when it comes to franchising but I'm going to hone in on the 2 most popular today.

The biggest issue new businesses confront has little to do with permits, time organization, or merely obtaining clients. Rather, one of the most substantial obstacle is often a tight budget. Restricted cash flow seems to have hampered the success of uncounted franchise founders. Moreover, given the tightfisted approach banks are taking to extending credit, securing loans is becoming more difficult than ever.

The benefits of franchising as a means of expanding a business are twofold. One, it involves low capital investment by the franchisor as the capital used to expand the network comes from franchisees. Two, by franchising the business, the franchisor places the expansion of his/her business in the hands of people who are motivated to make it work.

Franchising 101

Although franchising’s largest and most popular brands represent the images most people hold about the industry, recent research revealed that franchising has been significantly influenced by the growing number of new concepts appearing in the past few years. One-fourth of those had 10 or fewer units.

Buying a franchise is a major investment. You should expect to draw on almost all of your financial resources and/or take on additional lines of credit. Before start talking to franchisors, have these questions answered:

-What is your net worth? How much of that is liquid (accessible cash)?

-How much can you afford to lose? (Remember - nothing is guaranteed.)