Franchising is the method of doing business where a franchisor licenses trademarks and tried and proven methods of doing business to a franchisee in exchange for a one-time fee and a recurring payment which usually is a percentage of gross sales or gross profits as well as the annual fees.
Various tangibles and intangibles such as national or international advertising, training, and other support services are commonly made available by the franchisor, and may indeed be required by the franchisor, which generally requires audited books, and may subject the franchisee or the outlet to periodic and surprise spot checks. Failure of such tests typically involve non-renewal or cancellation of franchise rights.
A business operated under a franchise arrangement is often called a chain store, franchise outlet, or simply franchise.
Starting up a franchise is as complex as starting up a business from scratch. There are all of the basic issues including start-up expenses lots of questions need to be answered about the franchise fees both the initial fee and the ongoing royalties. Also very important are the renewal charges after the initial franchise period.
You need a business plan and the same level of financial analysis. Typically the franchisor has a very good idea of benchmark costs and and very good statistics with regards to the marketplace and the types of customers.
Take a look at this video and also take a look at the article on “Steps to Take Before Starting a Business” at:
https://ychange.com/small-business-consulting-articles.html