Answer:
Franchise is the method where the business is expanded by opening outlets and that are to run or operated by the independent owners. The process or procedure of franchise is costly but will be regarded as an investment.
Explanation:
Formation or Steps of Franchise
1. Measure the Pros and Cons - Before starting a franchise, one should use a tested and a tried business model. As it will provide helpful services like advertising, training and business advice.
2. Select the Right Franchise - It is vital to choose a franchise which suits goals, personality and skills of the person. I
3. Formation of LLC (Limited Liability Company) or Corporation - It is advantageous or beneficial for the person to start the franchise as a corporation or LLC. In both the cases, whether LLC and a corporation offers or provides liability protection and the tax breaks which are beyond the reach of the sole proprietor.
4. Conduct Research on Market Conditions and Opportunities of Franchise -Need to have a good understanding of the conditions of the local market . And in order to locate good opportunities of franchising, require the assistance of a franchising consultant. One should make sure that while choosing the franchise should have the following characteristics:
a. Sufficient experience
b. Reasonably quick time to profitability
c. Affordable initial and ongoing costs
5. Need to create a Business Plan - Well-written business plan will help the person to be in state of being organized and deliver better pitches to the investors. The business plan must include the following:
a. Company protocol
b. Rules
c. Training manual for Employee
6. Have a Secure Financing - When starting a franchise, the person should have sufficient amount of capital in order to cover the initial franchise fee and the startup costs.
7. Sign the Franchise Agreement or Contract - Last step is to sign the contract and then can start the business.
