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A Franchise is defined as "the right or license granted by a company to an individual or group to market its products or services in a specific territory."
A Franchisee is defined as "a person or company to whom a franchise is granted."
A Franchiser is defined as "a person or company that grants a franchise." (According to Websters Dictionary)
Basically, a franchise is purchased for a certain amount with an ongoing fee sent regularly to the company, which, in turn, provides you with a complete plan on running this particular business and use of logos and national advertising.
Advantages of Owning a Home-Based Franchise
Opening a business with proven name recognition.
You have the franchisors years of experience of running a business. This can save you countless lost hours and wasted money in trying things that do not work.
A good franchisor will provide training in how to run, manage and market the business.
A good franchisor will provide ongoing support, keeping you abreast of the latest developments in your industry, market trends, etc.
A good franchisor generally provides wide-ranging regional and national cooperative advertising.
The collective resources of the franchisor and your fellow franchisees give your business Fortune 500 credibility at a fraction of the cost.
A franchise, by definition, is a proven system.
You are not out there on your own. The franchisor has a definite interest in your well-being and profitability. The franchisor can be a valuable resource throughout the life of your business.
In a good franchise, you will have an exclusive territory, minimizing competition.
The potential to earn a comfortable, full-time living wage, and often, much more.
Because you are using a proven system, it will not take you nearly as long to turn a profit as when starting a business from scratch.
Working from home means you will have more flexibility in your work schedule.
Working from home also means lower overhead costs.
A franchise is your own business. You can build equity in your business and sell it later for a profit.
Although required to follow procedures dictated by the franchisor, you still have plenty of freedom to make your own decisions.
Disadvantages of Owning a Home-Based Franchise
You are obligated to follow someone else's system and procedures. If you are extremely independent or need to have things your way, you may feel oppressed by the many rules of frachising operation.
On the other hand, if you need a good deal of supervision and direction, the freedom of running your own business may make you uncomfortable.
Under the majority of franchise agreements you must pay an ongoing royalty or fee to the franchisor for the duration of your business life.
You are tied to the fortunes of your franchisor. If the parent company does well, it will help you to do well. If the company has trouble, this will most certainly have an impact on your business.
Legally, the franchisor still has the advantage. Although there are groups fighting to level the regulatory playing field, franchisors still have the ultimate control over your business, perhaps even to the point of terminating your franchise without having to show cause.
Working from home you may get distracted by other interests or responsibilities, and it is hard to leave the workday behind.
You may have to invest more money than you originally thought. Do you have the necessary financial reserves?
There is a chance that you will fail. Are you prepared to lose the money and time you invest in the business?
You may not make as much as you expect. Are you ready to do with less for an indefinite period of time?
You may have to spend long hours for little return, expecially in the beginning. Are you ready to work harder than you now do, if necessary?
Having your own business can be physically and emotionally taxing. Are you up to the challenge?
Do you have the self-discipline and self-motivation to manage your work productively and arrange for the support you need?
Unlike having a job, there are absolutely no guarantees in having your own business. Are you ready for the uncertainty?
Having your own business means not having any basic-level employer-provided benefits such as health insurance, unemployment insurance, workers' compensation insurance or employers share of Social Security payments. You will be responsible for generating the income to provide for yourself.
Excerpt from Home Businesses You Can Buy: The Definitive Guide to Exploring Franchises, Multi-Level Marketing, and Business Opportunities Plus : How to Avoid Scams
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