Look Out, Overhead: The Advantages of Buying an Online Franchise
When most people think of a franchise business, they automatically think of giant global franchises such as Subway or McDonald’s. These are “brick and mortar” franchises, meaning that the franchisee buys an actual shop or restaurant. But there are also online and home-based franchises such as Blue Coast Savings Consultants (a cost-savings consulting franchise run entirely online) and Cruise Planners / American Express Travel (a home-based cruise / vacation planning business). Internet-based franchises have distinct challenges, but also a range of advantages, which explains why many start-ups and entrepreneurs are becoming online franchisees and buying into the business.
Cost Advantages of an Online Franchise
One of the biggest advantages of an online franchise business is low overhead costs. The expenses of a traditional franchise business include buying commercial space, such as a retail shop or restaurant, and décor, paying building maintenance costs, and managing staff payroll. An online franchise is much cheaper to buy and run – all you really buy is a domain name and website. This means you can spend the rest of your budget on other key areas like marketing, advertising, and web development.
Online Franchises - Open for Business 24/7
Another advantage of an online franchise is that the ‘online shop’ is effectively open all day; revenue can be generated 24 hours a day, seven days a week.Also, an internet-based business is accessible by anyone, anywhere, reaching customers around the globe. Unlike conventional franchises, online businesses aren’t restricted by physical location or traditional hours of operation.
Online Franchises Move Quickly
From the franchisor (home headquarters) perspective, a hugely significant benefit of running an online franchise system is the ability to easily implement changes across the franchise.Instead of re-branding or changing protocol across dozens or even hundreds of physical locations, online franchises can make overhauling changes or tiny tweaks throughout the whole business with minimum effort. For the individual franchisee, this means that the benefits from a great new product idea, clever marketing campaign, or other helpful innovation can spread across the entire franchise system in almost no time.
Running an online franchise offers a business-owner a highly-supported network of franchisees with significantly reduced costs. The low initial investment and other advantages attract new franchisees daily, making online franchises a trend that will continue to grow in popularity.
See our full list of recommended home-based franchises and other franchise opportunities.
Best Practices in Protecting and Enforcing Trademarks, Copyrights and other IP
Trademarks, copyrighted works, trade secrets and proprietary business information form the core of any franchise system, and are frequently a company’s most valuable assets. Trademarks, including service marks, logos, slogans and trade dress, define the brand identity as presented to the public. The “behind the scenes” business know-how on which the system is built and implemented by franchisees is embodied in a variety of copyrighted and proprietary works – operations manuals, proprietary processes, recipes and formulas, custom software, advertising copy to name a few.
Choosing a Service Franchise or a Product Franchise
Most of the franchises offering Product oriented goods have very stringent rules. Since their brand is associated with a tangible good they must guarantee the desired quality from the consumer’s expectation. Franchisees must purchase the goods from a designated supplier and must keep items in their inventory as suggested by the franchisor. This can be company regulated policies or simply to help the franchisor launch some of their new products.
Watch out, Franchisees! 10 Franchisor Red Flags
Only a limited number of states require registration by franchisors, and franchisors are by no means required to register in states where they have no intention of selling franchises. However, if a mature franchisor appears to be consciously avoiding the registration states, this may suggest some level of internal concern about the FDD, the franchisor’s sales tactics, or the franchise system as a whole. The cover pages of the FDD will identify where the franchisor is required to register (and whether it has registered or not), and the charts in Item 20 of the FDD will explain whether the franchisor has ever sold a franchise in any of the registration states.
