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Franchises

A franchise is a form of business organization in which a firm which already has a successful product or service (the franchisor) enters into a continuing contractual relationship with other businesses (franchisees) operating under the franchisor's trade name and usually with the franchisor's guidance, in exchange for a fee.

Buying a franchise is popular because most franchisors offer some degree of ongoing marketing and operational support. For example, as a franchisee, your business may benefit from the franchisor's marketing campaigns, or have lower inventory costs because of the franchisor's suppliers.

Any franchise or business opportunity offering should be investigated thoroughly before a contract is signed. Danger signs include inflated promises of large returns on a small investment and sales tactics that pressure the buyer to act immediately. If it appears the franchisor primarily makes money from an up-front sales fee with no care about whether the franchise is a success, the buyer should always act with considerable caution.