The Complete Guide To Franchising For Beginners

Franchising Fundamentals: What, Why, How

If you have been wondering about stepping into business via franchising, but are unsure about the ins and outs of franchising, then this article is for you. This is where you will learn everything you need to know about franchising. Without further ado, let’s dive in!

What Is Franchising?

We begin by answering the most basic question: what exactly is franchising?

The International Franchise Association defines franchising as:

“ … a method of distributing products or services involving a franchisor, who establishes the brand’s trademark or trade name and a business system, and a franchisee, who pays a royalty and often an initial fee for the right to do business under the franchisor’s name and system.”

To break it down in simple terms, say you are the owner of a business X. There is another individual or organization (say, Y) that wants to run a similar business but doesn’t have the resources, like, or need to open a business of its own from scratch.

Now, Y approaches you with a proposal: you let Y use your established brand, clientele, and training resources to open up a unit of your business in a particular location. In return, they pay you a certain amount of one-time and recurring fees.

In this case, you, the owner of business X, will become the franchisor. You will receive an initial fee and a recurring royalty in lieu of the license for Y to operate its business under the name and system of your business X. Then Y will become the franchisee.

This is what franchising is all about. You can either be a franchisor who expands their business via franchising, or you can be a franchisee who pays a licensing fee to the owner of the business in order to run a unit of the business in a particular location.

How To Choose A Business For Franchising?

Now that you have understood how franchising works, we come to the next important question: how to make the right choice of business for franchising?

There is no right or wrong answer to this question. It depends largely on your personal preferences and goals. However, there are three fundamental questions that you must ask yourself before choosing an industry for franchising.

What Is Your Industry Of Choice?

The first thing you need to figure out is your choice of industry in which you want to start your business. The good news is that franchising as a model is available in virtually every sector or industry you can imagine. So, if you already have an industry in mind, chances are you will be able to become a franchise owner in it. The bad news is that if you don’t have any industry in mind, the plethora of options can get overwhelming.

Not to worry, though, because we will be filtering out the right options for you with the upcoming questions. But before that, here are the top 5 industries that have been the most profitable in franchising in the year 2022:

  • Health and Beauty Franchises
  • Fast Food Franchises
  • Retail Franchises
  • Home Improvement Franchises
  • Restaurant Franchises

What Is The Profitability Of The Industry Of Your Choice?

More often than not, it is better to have multiple choices of industries. This is because you may be very passionate about a particular industry, but owning a business in that sector may not be economically profitable.

That’s why you need to follow 2 things very strictly if you want to make the right choice for your franchising business:

  1. Never be emotionally attached to the industry you thought you wanted to get into.
  2. Have more than two options when choosing an industry – then narrow down to a single choice after analyzing the economic viability of your choices.

Do You Have The Skills & Interest To Upskill In The Industry?

Let’s say you find the best industry for franchising in economic terms. But if you don’t have the interest or skills to grow and upskill as an individual in that industry, you will not be able to build a business that is profitable and sustainable over the long term.

The fast-food industry could be booming exponentially – but if you don’t have an interest in upskilling your knowledge about the latest technologies, laws, regulations, and other specifics of the industry, you will only go so far before hitting the negative graph.

On the other hand, the beauty industry may be growing at a lower rate than the fast-food industry; but if you have the passion to grow and upskill in the beauty industry as an individual, you can take your franchising business to great heights in a sustainable way!

Why You Should Start Off As A Franchisee?

Business can be risky and overwhelming, especially if you do it all alone. Franchising offers a relatively safer way of entering the business arena. When you take up franchising, you are connecting with a business that has already made its mark in the industry. You are entering a network of established clientele, a strong brand identity, and a time-tested business model.

Franchising allows you to go all-in as you would in a standalone business, but with the added advantage of substantially reduced uncertainty and instability. As a franchisee, you get access not only to an established brand and business but also to the training and resources that will help you grow and develop as a business, and as an individual!

What Next?

Now that you have the fundamental knowledge about what a franchise is and how to choose the right industry, you can start taking your first steps with ease. Put on your research hat and dive into the search for the right industry for you. And stay tuned as we bring more informational articles that will help you understand the world of franchising.

For information on franchising with Lash + Company, visit and fill out the form. We’re happy to help you get started!