Franchise businesses are all the rage these days, and for good reason. They offer a great way for the person with entrepreneurial skills to enter the business world directly with virtually no start-up costs. However, there are many questions that people have regarding franchise opportunities, some of which are very important.
One of the most common questions concerns franchise disclosure and the legal status of franchisees. Basically, a franchisee payments an upfront fee to a franchiser, generally in return for the franchise. In return, the franchisee gains access to a particular brand, ongoing royalty payments from the franchiser, and the privilege of engaging in the business of selling its products and services through the franchiser’s network. Once the franchise is terminated, the franchisee must stop using those resources and cease all activities related to the franchise. The problem with this is that, while the franchise may be terminated for breach of contract, there are cases where franchisees are allowed to sue their franchisers for breach of warranty.
Another important question concerns the possibility of franchise termination. If a franchise is discovered in shoddy working condition or if it is blatantly obvious that the franchise is a shoddy operation, will the franchisee still be allowed to remain in the franchise? While some jurisdictions do allow franchisees to sue for breach of contract violations, many jurisdictions do not, and even if they do, there is a significant burden of proof required for such lawsuits. Moreover, even in jurisdictions that do allow franchisees to sue for breach of warranty, often franchisees can only seek damages for actual defects within the franchise.
There are a few business opportunities related to franchises that seem to have a bright future. For example, one emerging segment of the franchise industry is call center franchises. Call center franchises usually focus on offering customer support in different types of business opportunities, such as in customer service, technical assistance, or social services. While these businesses often have a limited scope, there is a trend toward expansion, which is beginning to make call centers quite lucrative.
Also, franchising seems to be making a comeback. Some of the original brand name restaurant chains are now offering franchisees the chance to own their own franchise. Even though McDonald’s is no longer the largest franchise brand in the United States, there are still a number of small fast food franchises available. More importantly, some franchised outlet malls are beginning to open across the country. While this business opportunity is not widely publicized, it is likely that there will be an increase in the number of outlet malls as the nation continues to age.
As more people consider the benefits associated with franchise ownership, there is a reasonable chance that franchisees will see an increase in their own profitability. However, just like any other investment, franchisees must carefully evaluate all the pros and cons. Franchisees must also be careful to look out for companies that are simply out to get them in the hopes that they will sell their franchise rights and transfer them to another company. As you can see, there are a number of factors to take into account when looking at the pros and cons of franchise ownership. Many people have become successful after buying franchise rights, but unfortunately there have also been a number of franchisees who have not made the most of the opportunity that they were given. By closely examining all of the variables, it should be possible to find a business venture that can be profitable for you.