Franchising Summary

What is a franchise–and how do you know if you’re right for one? Essentially, a franchisee pays an initial fee and ongoing royalties to a franchisor. In return, the franchisee gains the use of a trademark, ongoing support from the franchisor, and the right to use the franchisor’s system of doing business and sell its products or services.

In addition to a well-known brand name, buying a franchise offers many other advantages that aren’t available to the entrepreneur starting a business from scratch. Perhaps the most significant is that you get a proven system of operation and training in how to use it. New franchisees can avoid a lot of the mistakes start-up entrepreneurs typically make because the franchisor has already perfected daily operations through trial and error.

Reputable franchisors conduct market research before selling a new outlet, so you’ll feel greater confidence that there is a demand for the product or service. Failing to do adequate market research is one of the biggest mistakes independent entrepreneurs typically make; as a franchisee, it’s done for you. The franchisor also provides you a clear picture of the competition and how to differentiate yourself from them.

Finally, franchisees enjoy the benefit of strength in numbers. You’ll gain from economics of scale in buying materials, supplies and services, such as advertising, as well as in negotiating for locations and lease terms. By comparison, independent operators have to negotiate on their own, usually getting less favorable terms. Some suppliers won’t deal with new businesses or will reject your business because your account isn’t big enough.

Here are some key factors of a Womsga Virtual Franchise Opportunity:

  • A Womsga Virtual Franchise features our trademark; investors operate under Womsga’s name
  • A Womsga Virtual Franchise is less expensive than a traditional franchise and we don’t charge ongoing royalty fees.
  • A Womsga Virtual Franchise opportunity allow investors to invest over short, or long-terms with no restrictions as to geographic markets.
  • A Womsga Virtual Franchise provides continuing support between the seller and the buyer throughout the investors investment term.

Franchise Summary-Franchising is a business model that involves an owner licensing his trademarks and methods to an independent entrepreneur to conduct the same business in another territory subject to the terms and conditions of their agreement. The United States regulates franchising through a variety of federal and state laws, which the Federal Trade Commission, or FTC, and other state agencies enforce. Privacy issues associated with a franchising business include disclosure requirements, franchise privacy policies, customer notification and franchisor’s liability for privacy claims.

Franchisor’s Disclosure

The FTC franchise rule sets preconditions to a sale requiring franchisors to provide detailed disclosure statements or a prospectus to each prospective buyer at least 14 calendar days before execution of the franchise contract or payment. The disclosure covers a variety of matters that the franchisee might otherwise not know about, including complete details about the parent company and any other affiliates, bankruptcy filings, financing sources, trademarks, patents, copyrights and other relevant proprietary information. The franchisee can use this private information to decide whether or not to buy the franchise. The law requires disclosure of the franchisee’s name, address and contact details.

Regular Updates

State and federal laws also require that franchisors regularly update franchise disclosure documents with all material changes so franchisees relying on the information are not deceived or misled. Because states have different privacy laws and requirements, franchisors need to research the existing laws in the states where they operate to be in compliance with all applicable laws.

Consumer Notification

The FTC has established fair information practices relating to customer privacy online that franchisors need to observe. Consumers should be given information about the franchise’s online privacy policies so they make informed decisions about using the site, and they should have a choice about the use and dissemination of the information the franchise collects. Consumers should also have a way to access the information and to challenge its accuracy and completeness, if the need arises. And consumers should have a way to ensure that the franchisor complies with these principles and have an avenue to report failure.

Franchisor’s Liability

Franchisors may be held liable for privacy breaches that their franchisees commit, especially if it happens because the franchisor had no formal privacy policies or because these policies were inadequate. Franchisees generally have a free hand in the way they run their operations, but they must do so in a manner that respects the franchisor’s terms and conditions and maintains the general standards of the establishment. To mitigate their exposure to breach of privacy claims, franchisors may control all private company information, including that of the franchisee’s business. However, it is a better business practice to establish the general scope of privacy rules so franchisees have some guidelines.