Franchise Funding
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A lot of entrepreneurs prefer to buy a franchise rather than start their own new business. The reason for this is that the risks involved in running a franchise are much more measured than the risks of staring a new business. However, there are no guarantees in business.

While establishing a new business may give an entrepreneur more creative freedom it also requires more capital resources and more planning. Entrepreneurs need to detail fairly easy on their advertising and marketing campaigns.

Franchising provides an entrepreneur with a proven system and the support of a much larger organization. An entrepreneur of a franchise needs to spend less time on advertising and brand recognition.

Another advantage of being a franchisee is that the entrepreneur gets technical support all the way. As part of a franchise system, an entrepreneur can count on the efforts of other franchisees to compliment marketing programs.

There are several costs involved in setting up a franchise and an entrepreneur needs to consider all of them before signing up to be franchisee. The first consideration that an entrepreneur needs to make is that the initial franchise fee is usually non-refundable. This can amount to several thousand dollars.

In addition, establishment costs of a franchise are high. The establishment costs are very comparable to the entrepreneur setting up a new business. These costs include rent and hiring costs.

Just as a new business owner needs to decide between owning an office space and renting out a space, so too does a franchise owner. The owner needs to decide if he or she wants to rent out commercial property, own it or rent out a small kiosk in a mall.

Again just as the owner of a new business would, the franchise owner also needs to come up with a business plan complete with financial goals and targets. This is not only to raise capital from business investors but also to get the franchise.

An entrepreneur of a franchise may also need to pay the franchisor royalties based on a percentage of weekly or monthly gross income. An entrepreneur is expected to make these payments even if the monthly or weekly earnings are not very high.

Finally, an entrepreneur needs to pay into an advertising fund. Some portion of the advertising fees may go for national advertising or to attract new franchise owners.

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