Business Franchising- Part 2

What can a franchise do for me that you cannot do for yourself?
Buying a franchise means that you are buying into a functioning and proven business model. There is a significantly lower rate of failure for franchisees than for entrepreneurs with original business concepts. A large number of new business start-ups fail each year, but with a franchise you will be buying into a proven and successful concept. Additionally, many franchises profit because the items/services they sell already have a name and a reputation behind them.

How can I find a lawyer that specializes in franchising?
Contact the American Bar Association Service Center 750 North Lake Shore Dr. Chicago, IL 60611 312-988-5522 The American Bar Association publishes a Membership Directory of the Forum Committee on Franchising. Call or write to request a copy of the directory.

How do you explain the success rate for franchised businesses?
A franchise's business system should provide a formula for operating a successful business. Typically, operating strategies have been systemized and optimized by the time the company is franchised and the company should be able to help franchisees with any challenges that occur. According to the SBA, and tons of real world experience backs this up, businesses most often fail from lack of management skills. With hard work, you and your franchisor should be able to avoid and overcome any problems that occur. In surveys, nine out of ten franchise owners stated that their business was at least somewhat successful.

What is the history of franchising?
The word "franchise" comes from old French, meaning privilege or freedom. In an effort to collect taxes, governments would select certain people to gather fees within a given geographical area. These "collectors" kept a portion of the payments they collected and then remitted the balance to the Pope. Others say franchising began when the local sovereign bestowed the privilege to hold fairs and trade freely. Basically, this was an endorsement of a monopoly on commercial ventures. This practice took place throughout the Middle Ages and eventually became part of European Common Law. Franchising continued to develop throughout history.

In the 1840's, German ale brewers granted exclusive rights to certain taverns to sell their brew. In 1851, the Singer sewing machine company granted limited distributorships for their famous sewing machines. The format, language, and contractual agreements are still used as a model for franchising documents today!