What is franchising?
The International Franchise Association, the major trade association in the field, defines franchising as "a continuing relationship in which the franchisor provides a licensed privilege to do business, plus assistance in organizing, training, merchandising and management, in return for a consideration from the franchisee."
Franchising is the opportunity for an individual to own his or her own business, even if he or she is inexperienced and/or lacks adequate capital. During recent years, franchising, as a type of business operations, has been expanding rapidly and entering into new areas of application. The most recent industry study estimates that franchised businesses accounted for $803 billion in annual sales in 1992. Retail (business format) franchising is estimated to account for 35% of total U.S. retail sale s. More than 8 million people are employed by franchise establishments.
Franchising is a form of licensing by which the owner (the franchisor) of a product, service or method obtains distribution through affiliated dealers (the franchisees). The holder of the right is often given access to a geographical area.
The product, method or service being marketed is identified by a brand name, and the franchisor maintains control over the marketing methods employed, or assists the franchisee in the operation of the business.
In many cases, the operation resembles that of a large chain with trademarks, uniform symbols, equipment, storefronts and standardized services or products. The franchisor maintains uniform practices as outlined in the franchise agreement.

Why buy a franchise?
Franchising is a business model whose primary purpose is risk minimization. Every study ever done on the success rate of new (non-franchise) business startups concludes the same thing. Starting up a new business is very risky. Most studies show that over 90% fail within three years. The primary reason that the failure rate is so high is because the owners have to go through the learning curve of operating that specific type of business. Unfortunately, the market place is not very tolerant of the inexperienced beginners trying to learn how to operate a new business. If you can't compete in the market place you will be destroyed from more than one aspect.

Another reason why it is prudent to buy a franchise is that a franchise investment can be thoroughly researched before any significant expenditure is made. With a new business startup (non-franchise) you are always operating in the dark. With a franchise the franchiser is a wealth of information about the business from how to prepare a pro forma to the best personality traits for the business. But the most important information comes from the existing franchisees. With a good systematic approach you can get answers to nearly all the really key questions. Such as, Do you feel that you were properly trained? How long did it take before you reached break even? What is your annual return on investment? How do you feel about the day to day duties of the business, and if you had to do it over, would you do it again? You can in a very real sense try the business on before you buy to make sure it is a good fit for you.
Another very important reason to buy a franchise is intertwined into its basic nature. Franchising inherently leads to rapid growth, because the franchisees provide the expansion capital. There are few restraints to growth in franchising. As a franchise system expands into hundreds of units many positive things begin to happen. The name begins to become well known because people see it everywhere. Most people associate size with success. The bigger the franchise the better it must be. The large number of units enables the franchise to advertise heavily, which tends to increase sales. A synergy begins to be created in which success begets success. The franchise begins to squeeze out competition through its sheer size. The franchise can buy products in large quantity at significant discounts, which it passes on to the franchisees. The synergy just grows and grows.
In summary the primary reason you should buy a franchise as opposed to starting up a non-franchise new business, is to minimize risk and enhance your chances of success.

For more information about the Coldwell Banker franchise system in Lebanon please contact us at Franchise.support@coldwellbanker-lb.com