Buying a franchise
Franchising is a business relationship in which you (the franchisee) pay the owner of a business (the franchisor) for the right to market and distribute their goods or services over a fixed period.
Buying a franchise can be a smart move, particularly if you haven't owned a business and have no experience being self-employed. Ideally, franchising secures an established brand for a product or service. It provides a proven business model and marketing system, which reduce typical start-up risks. Most franchisors also provide ongoing training and support.
However, buying a franchise can limit the way you do business. Franchisors may place restrictions on what you sell, where you operate and how you do business. They may demand a higher percentage of the profits generated by the franchise. They may also make business decisions that have a negative effect on the value of your franchise. You need to be careful about the type of franchise you buy, and look to match your own strengths and weaknesses against the different franchises on offer.
This guide provides an overview of buying a franchise. It explains the different types of franchises, things to think about before buying a franchise, the advantages and disadvantages, and your obligations under the Franchising Code of Conduct.
- Last reviewed
- September 8, 2014