History of Franchising in the United States
The International Franchise Association (IFA) and the American Franchise Association (AFA) were formed to combat abuses in the industry. The IFA developed a code of conduct for licensors and the AFA formed a trade group to represent the interests of franchisees.
In 1978, the Federal Trade Commission (FTC) adopted its own set of rules and regulations.
Today, many States regulate the franchise industry.
More than 300,000 franchised small businesses operating in the United States account for an estimated $1 trillion worth of income each year and provide jobs for some eight million Americans.
An agreement between a franchisor and franchisee generally consists of the following:
• There is a transfer of products, know-how, and proprietary information developed by the licensor, either as a product or as a business format, that enables the licensee to conduct its business.
• Trademarks or service marks are licensed, so that business is done under a common name or logo type.
• There is an exercise of some sort of control by the franchisor over the manner and methods of the franchisee and/or the conduct of its business.
• And of course there are payments by the franchisee to the franchisor. These payments can be seen as initial up front fees, continuing royalties, product charges, etc. Royalties are typically charged on gross revenues of the licensor. Gross revenues are often described in different and complex manners and care needs to be taken in analyzing these charges.
Franchise agreements can be complex and complicated. An interested buyer should consult with experienced professionals and legal counsel.
Franchised companies have higher rates of success than non-franchised businesses. Sometimes, however, the business owners incomes are not what they expected or hoped for.
A business opportunity venture, may be deemed a franchise and covered by applicable laws, if the following are present:
• The licensee sells goods or services supplied by the franchisor, or possibly by other companies. The licensor may instruct the licensee where to buy the goods or services, or may sell the goods or services through a related company or business.
• The franchisor finds, rents, subrents, etc., business premises or retail sites for the goods or obtains locations for example vending devices or racks.
• At least $500 is paid by the licensee to the licensor within the first six months of the franchise.
Once deemed a franchise, the disclosure and compliance costs can be substantial.
When it comes to travel agencies, you have a few options available to you. If you love travel and have always dreamed of a travel agency franchise being the right choice for you, then you may want to know the benefits so that you can identify the right options for you to ensure you achieve success and enjoy a successful business operation moving forward.
The first benefit to choosing a franchise for a travel agency is that they already have all the essential technology in place. Think about it, when you want to start your own travel business, you are going to need a brand name, you will need to have software where you can manage your bookings, your deals and keep it updated and so much more. This software can be expensive if you have to have it custom developed for your unique needs. When it comes to buying a travel agency franchise, the technology is already there, all you have to do is install it onto your computer systems and start using it without delay.
Another benefit to this option is the marketing that you get to help you. With a franchise, the holding company will promote your business on your behalf, which means the brand is already visible the day you start your business. As you can imagine, you can’t get any better than that. You open your website for the first time and your company is known throughout your area. When it comes to this investment, you are paying for a trusted brand which is highly visible, reducing the amount of marketing that you need to achieve in order for clients to find your business and take advantage of your deals.
Buying a franchise for a travel agency comes with a wealth of support from the franchiser, another major benefit. When you are investing in a new business, having a back up support plan is something that you will cherish and appreciate, especially in the first year or more. As you become accustomed to how the software works and what is expected of you as a franchisee, the more confident you will become. But that initial support is something that you can rely on each and every day.
Of course, you don’t get any better than investing in a business that already comes with a known name. When you start your own business, you have to pay close attention to your branding, choosing a catchy name, having your logo designed and ensuring that people get to see it daily, so that they remember it to use when they want a service you provide. With a franchise for a travel agency, the name is already there, which means people already know the name, a major benefit, which can save you valuable time, energy and money in the long run.
The final benefit of a franchise for a travel agency is that you have a wider range of providers to work with. Hotels, resorts, airlines, car hire companies and tour companies will already know your company’s name. What this does is you already have the reputation with these companies, making it easier to work with them and secure the best deals to share with your clients now and moving forward.
Remember, even when looking at investing in a franchise, you want to do some research to ensure that you are making the best investment choice for you that will offer you a good return on your investment. Ensure you are completely comfortable with what is offered, what is expected of you as the franchisee and what the franchisor will do for you to ensure your success.