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Going into business for yourself is a daunting task. There&rsquo;s a lot on the line for aspiring entrepreneurs looking to launch a new concept-- from financial burdens to establishing recurring revenue, there are a lot of tasks that need to be checked off in order to experience long-term success. That&rsquo;s why people often turn to franchises to make their dreams of business ownership a reality. While the model still allows entrepreneurs to be in business for themselves, it comes with established programs that ensure they&rsquo;re never truly by themselves.

But how do you know for sure if franchising is right for you? And where do you start on your journey to buy a franchise? First, you need to make sure you understand the ins and outs of the business model.

According to the fourth edition of Andrew J. Sherman&rsquo;s Franchising &amp; Licensing, common ways companies try to expand are by:

<ul>
	<li>Forming new business ventures</li>
	<li>Joint ventures</li>
	<li>Co-branding</li>
	<li>Entering new domestic or international markets</li>
	<li>Developing new products and outsourcing</li>
	<li>Franchising!</li>
</ul>

Brands turn to franchising in particular as one of many&nbsp;ways to continue their growth trajectory. When there&rsquo;s just one business owner or corporate team trying to move forward with limited resources,&nbsp;it&rsquo;s difficult for concepts to grow. However, franchising leverages the intellectual and financial resources of others to continue expanding even while others are stalled.

&ldquo;When non-franchised businesses want to expand across the country or internationally, they have to save money for years in order to hire employees, create marketing campaigns and secure real estate,&rdquo; said Rick Robinson, founder and president of <a href="http://www.services4franchising.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=chapter-1-breaking-down-the-franchising-business-model-by-bullets-12417" target="_blank" rel="nofollow" target="_blank">Services4Franchising</a>. &ldquo;But when businesses decide to franchise, they&rsquo;re able to leverage the time and efforts their local owners put in, enabling them to grow at a much faster rate. Franchising gives entrepreneurs the ability to open dozens of locations in one year, which can&rsquo;t be done by businesses going it alone.&rdquo;

Franchising brings together passionate people, established intellectual property and proven business concepts to create multiple revenue streams, ultimately allowing concepts to tap into more opportunities to grow and turn a profit. And Sherman notes that the benefits of the franchising business model don&rsquo;t end there. Reasons for brands to franchise include:

<ul>
	<li>The ability to improve operations</li>
	<li>Economies of scale</li>
	<li>Increasing market share</li>
	<li>Building more equity in the brand</li>
	<li>Efficiencies and economies of scale</li>
	<li>Increase market share quickly and build brand equity</li>
</ul>

By electing to expand through franchising, brands have the opportunity to expand at a more rapid rate. Even if companies have enough money to expand through their own resources, it takes more time to experience strictly corporate growth. Finding franchising partners enables businesses to make the most out of their potential in a low-cost way, and also shifts responsibilities like site selection, employee training, personnel management and advertising to its local owners.

According to Steve Beagelman, president and CEO of <a href="http://www.smbfranchising.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=chapter-1-breaking-down-the-franchising-business-model-by-bullets-12417" target="_blank" rel="nofollow" target="_blank">SMB Franchise Advisors</a>, the benefits of that rapid expansion aren&rsquo;t limited to franchisors. The system is also designed to enhance franchisees&rsquo; experiences and boost their bottom lines.

&ldquo;Concepts that become franchise chains are able to achieve a heightened level of brand recognition at a much faster rate,&rdquo; said Beagelman. &ldquo;Franchises have the ability to build on the momentum that comes with expansion, and appear on billboards, radio shows and TV. That exposure is ultimately what drives a brand forward.&rdquo;

In order to officially launch a franchise concept and tap into those benefits, brands need to follow three initial steps, according to Sherman:

<ul>
	<li>Identify your intellectual property (IP) and evaluate its commercial potential</li>
	<li>Develop that IP into a commercial product</li>
	<li>Go to market</li>
</ul>

There&rsquo;s no shortage of protectable types of IP that brands can claim when getting their emerging franchise off the ground. And awarding these legal licenses to franchisees is what defines the industry at its core:

<ul>
	<li>Patents</li>
	<li>Trademarks, including slogans and brands</li>
	<li>Web sites and content</li>
	<li>Show-how and know-how</li>
	<li>Distribution channels</li>
	<li>Trade dress</li>
	<li>Customer and strategic partner relationships</li>
	<li>Proprietary processes and systems</li>
	<li>Knowledge and technical works</li>
</ul>

In franchising in particular, the brand creates demand that then allows the model to grow through an operating system that builds loyalty and brand equity. By repeating factors like trademarks, service marks, trade dress, decor and other intangible qualities, concepts are able to establish a strong presence that lead to strong awareness on local, regional, national and even international levels. And while franchisees pay royalties to their franchisors, they also receive ongoing training and support in return.

&ldquo;For a small fee, franchisees get so much in return. From brand recognition to website maintenance, franchise brands bring years of experience to the table when they&rsquo;re helping a new owner launch their business,&rdquo; said Robinson. &ldquo;Joining a franchise brand can ultimately help a new owner speed up the time it takes to become profitable, which isn&rsquo;t something that should be overlooked.&rdquo;

One of the biggest misconceptions facing the franchising industry is that it&rsquo;s limited to major fast food chains. However, many types of businesses are related to&nbsp;franchising. Examples include:

<ul>
	<li>Home-based businesses</li>
	<li>Sales and distributors that are product driven</li>
	<li>Retail store where business formats are emphasized</li>
	<li>Management-driven, multi-unit concepts that stress large territories or regions</li>
	<li>Satellite carts and kiosks</li>
	<li>Financial investments and large-scale projects</li>
</ul>

However, it&rsquo;s not enough for brands to simply franchise their concept in order to experience success. Good franchisors need to bring a proven and established system to the table in order for franchisees to make the concept their own in local communities across the country or globe. That&rsquo;s why entrepreneurs weighing whether or not to buy a specific franchise should investigate and check for the following:

<ul>
	<li>Proven prototypes</li>
	<li>Strong management teams</li>
	<li>Sufficient funds</li>
	<li>Distinctive and protected trade identities</li>
	<li>Proprietary or proven methods of operation and management</li>
	<li>Comprehensive training programs for franchisees</li>
	<li>Field support staff</li>
	<li>A set of comprehensive legal documents</li>
	<li>Demonstrated market demand</li>
</ul>

Without those traits, franchise brands risk failure. That&rsquo;s why some of the most common reasons that franchisors never achieve success include:

<ul>
	<li>A lack of leadership</li>
	<li>A lack of franchise communications systems</li>
	<li>Breakaway franchises who don&rsquo;t follow the system</li>
	<li>Decentralized advertising</li>
	<li>A lack of an effective PR strategy</li>
	<li>An absence of market research</li>
	<li>No screening systems for prospective franchisees</li>
</ul>

To succeed as a franchise, brands need to have a full and equal understanding of their local owners and consumer trends. At the end of the day, it&rsquo;s those personal interactions that will make or break their success-- both as a franchisor and for their franchisees.

&ldquo;At the end of the day, a franchise brand is only as good as the people behind it. Who brands chose to partner with can ultimately determine your success, which is why they should be selective when partnering with franchisees,&rdquo; said Beagelman.

But it&rsquo;s not just up to brands in determining who is the best fit for them. Ultimately, buying into a franchise concept begins and ends with an aspiring entrepreneur. And as the industry continues to grow, the number of business owners turning to franchise concepts for help is expected to climb. According to the <a href="http://franchise.org/sites/default/files/Franchise_Business_Outlook_Jan_2017.pdf?utm_source=1851franchise.com&utm_medium=article&utm_campaign=chapter-1-breaking-down-the-franchising-business-model-by-bullets-12417" target="_blank" rel="nofollow" target="_blank">International Franchise Association&rsquo;s Economic Outlook for 2017</a>, the franchise sector is expected to grow by $36 billion in 2017 to $710 billion, which is a 5.3 percent jump. And by following along with 1851 Franchise&rsquo;s guide to buying a franchise, aspiring business owners will go into the increasingly popular industry armed with the confidence that they&rsquo;re making the best possible decision for themselves.

Chapter 1: Breaking Down the Franchising Business Model by Bullets

1851 Franchise

Before you decide to invest in a franchise brand, it’s essential to know the ins and outs of this unique business model.

This brand page has been paid for by 1851. Content within this page that is paid will showcase a Sponsored icon. This means the brand has engaged 1851 FRANCHISE to write the content. Content without the Sponsored Icon is aggregated media placements the brand earned. Questions can be sent to editorial@1851franchise.com

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Private Equity Fuels Jiffy Lube’s Next Chapter as Monomoy Strikes $1.3 Billion Deal

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Photo of SONIC franchise logo against blue sky backdrop

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<a href="https://hardeesfranchising.com/">Hardee’s</a>, a 65-year-old burger chain best known for its Thickburgers and breakfast biscuits, is facing a fast-moving round of closures driven by a franchise dispute rather than a bankruptcy filing.&nbsp;<a href="https://www.inc.com/ava-levinson/hardees-shutting-dozens-restaurants/91282586">Inc. recently reported that</a> 77&nbsp;<a href="https://1851franchise.com/franchise-deep-dive-hardees-franchise-costs-fees-profit-and-data-2721286">Hardee’s</a> restaurants are expected to close within two weeks as one of the brand’s largest franchisees exits the system.&nbsp;According to the report, Hardee’s is suing&nbsp;<a href="https://www.arcburger.com/">ARC Burger</a> — a franchise operator owned by&nbsp;<a href="https://www.highbluffcap.com/">High Bluff Capital Partners</a> — alleging the company fell behind on required payments and other contract obligations. Twenty-eight locations had already gone dark as of late December, with remaining sites scheduled to shutter across eight states: Alabama, Florida, Georgia, Illinois, Missouri, Montana, South Carolina and Wyoming.&nbsp;At the center of the complaint is the franchising “stack” of ongoing fees and pass-through costs that keep a system running. ARC Burger allegedly owes more than $6.5 million, including royalties, advertising fund contributions, technology and training fees, rent and taxes, and that payments stopped in December 2024. Hardee’s also argued in the lawsuit that the franchisee’s cash flow was not being used to bring accounts current.&nbsp;Hardee’s, for its part, is framing the shutdowns as a contractual enforcement issue, not a brand-wide retrenchment. “These closures are a result of ARC Burger’s failure to cure its defaults under its franchise agreements, despite solid sales,” a Hardee’s spokesperson said.&nbsp;The situation highlights a familiar franchising pressure point: unit economics. Inc. reported that Hardee’s operates more than 1,800 U.S. restaurants and that average annual sales per location are less than $1.2 million, well below averages cited for&nbsp;<a href="https://1851franchise.com/franchise-deep-dive-wendys-franchise-costs-fees-profit-and-data-2722520">Wendy’s</a> and&nbsp;<a href="https://1851franchise.com/how-much-does-it-cost-to-buy-a-mcdonalds-franchise-2724654#stories">McDonald’s</a>. Lower volumes can leave franchisees with less room to absorb higher labor, food and occupancy costs while staying current on fees.&nbsp;Hardee’s said it is working to limit fallout for workers and communities and is looking for ways to reopen closed restaurants. For franchising, the next chapter will likely involve finding replacement operators, transferring sites and rebuilding compliance — a reminder that franchise growth depends as much on franchisee solvency and execution as it does on consumer demand.Read the original article&nbsp;<a href="https://www.inc.com/ava-levinson/hardees-shutting-dozens-restaurants/91282586">here</a>.Want to learn more about how 1851 helps franchisees find the right franchise opportunity? Visit&nbsp;<a href="https://www.1851growthclub.com">www.1851growthclub.com</a> and start your journey.

Hardee's Franchise - ARC Burger Lawsuit - 1851 Franchise

The closures stem from alleged unpaid royalties and missed franchise obligations by a major operator, not a broader chainwide collapse for the Hardee’s system.

Hardee’s Lawsuit Targets Franchisee as 77 Restaurants Prepare to Shut Down

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As the health and wellness business in America continues to fill out, the fitness industry is growing alongside it. The industry now generates&nbsp;<a href="https://www.ibisworld.com/united-states/industry/gym-fitness-franchises/5599/">over $7 billion</a> in annual revenue, with a revenue increase of nearly 3% in 2023 alone.Rebounding since COVID, both big box and boutique franchises have shown&nbsp;<a href="https://athletechnews.com/fitness-franchising-by-the-numbers-10-key-stats/">membership growth</a>, with premium establishments up 21% compared to a whopping enrollment bump of almost 70% on the budget gym side.&nbsp;&nbsp;<h3>The Pros And Cons Of Big Box Gyms</h3>When it comes to choosing the right fitness franchise, there are pros and cons to each.Big box gyms are able to cast a wider net, attracting a clientele ranging anywhere from newbie to seasoned veteran, with a lower cost of entry potentially attracting even the marginally curious to the idea of a well-established, properly marketed brand.&nbsp;Big box and other low-cost fitness franchises are also able to capitalize on services like personal training and retail amenities, increasing revenue.Driven by recurring membership fees, big box gyms generally cost less. However, the wider net cast in terms of building a clientele, tends to require more equipment in a bigger space, increasing costs like rent. And with a wider array of workout machines to both service and maintain, additional costs tend to follow.<h3>The Pros And Cons Of Boutique Fitness Concepts</h3>On the boutique side, franchises are typically able to offer a more personalized fitness experience, catering to niche markets with an eye on community, quality and loyalty. However, a more hands on approach to management and day-to-day operations may also be necessary to deliver the more customized, immersive experience often demanded of the more boutique environment.As a result, boutique fitness concepts are typically able to capitalize on a more premium pricing model driven by the idea of exclusivity.But, while less equipment in a smaller space can help rein in expenses, it can also be difficult to build the more specific clientele required by the boutique experience, rendering selection of proper location crucial.<h3>Finding The Right Fit</h3>As potential franchisees assess the available opportunities in the fitness franchise realm, it’s important to ponder a number of factors which can impact the bottom line.In terms of budgeting, a full understanding of both initial investment and ongoing operational costs is crucial.&nbsp;Getting to know the customer and surrounding area can help franchisees assess just how much the consumer is looking to pay for a gym membership, helping clarify the big box versus boutique decision when it comes to the question of how to buy a franchise.There’s also market saturation, with big box gyms in particular becoming an increasingly crowded marketplace.On the management side, it’s important for franchisees to seize upon a specific approach, whether it’s applying a more hands on style to the level of personal interaction required on the boutique side or focusing on the moving parts in play in the larger, more complex big box environment.&nbsp;When it comes to buying a fitness franchise, an understanding of the consumer, proper assessment of the marketplace and specific approach to management can go a long way towards avoiding potential risk, helping franchisees find success as they ponder entrepreneurship via fitness franchises.For more info on fitness franchises, check out these related stories on 1851 Franchise:<ul><li><a href="https://1851franchise.com/fitness-franchises-2025-trends-opportunities-2729600">The Rise of Fitness Franchises in 2025: Trends, Opportunities and What to Expect</a></li><li><a href="https://1851franchise.com/top-health-and-wellness-franchises-2729821">Top 15 Health and Wellness Franchises Opportunities for 2025</a></li><li><a href="https://1851franchise.com/fitness-wellness-franchise-guide-2729443">How To Choose the Right Fitness or Wellness Franchise for You</a></li></ul>

Buying a fitness franchise, people exercising

As the fitness industry continues to grow fast, the decision for potential franchisees lies in whether to invest in big box or boutique gym franchise opportunities.

Boutique vs. Big Box Gym Franchises: Which Offers Best ROI in the $7 Billion Fitness Market?

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<a href="https://kbpbrands.com/">KBP Brands</a>, the multi-brand franchisee group with over 1,100 restaurants across 32 states,&nbsp;<a href="https://www.prnewswire.com/news-releases/kbp-brands-doubles-down-on-sonic-with-78-restaurant-acquisition-302695591.html">has announced</a> its acquisition of 78 additional SONIC units. The new units are spread across Ohio, Kentucky, North Carolina, Tennessee and Virginia.This is the second SONIC acquisition KBP has completed in less than two years, and it makes KBP the fourth-largest SONIC franchisee in the system with 164 total locations across eight states.“We’ve had a successful five-year partnership with Inspire Brands and have seen strong results from our initial SONIC purchase,” KBP CEO&nbsp;<a href="https://www.linkedin.com/in/mike-kulp-820820">Mike Kulp</a> said in a statement. “We look forward to expanding that with a larger footprint and additional operational efficiencies.”KBP is one of the country’s largest franchisee groups, reporting approximately $1.5 billion in annual sales across its portfolio, which includes KFC, Taco Bell and Arby’s, another Inspire Brands franchise."Our relationship with KBP Brands continues to grow due to their operational excellence and our shared commitment to guest satisfaction and a culture that champions innovation," said&nbsp;<a href="https://www.linkedin.com/in/john-kelly-b48426b">John Kelly</a>, brand president at SONIC. "KBP's expansion with SONIC demonstrates their dedication to our vision and the brand's long-term growth."Read the full press release&nbsp;<a href="https://www.prnewswire.com/news-releases/kbp-brands-doubles-down-on-sonic-with-78-restaurant-acquisition-302695591.html">here</a>.Want to learn more about how 1851 helps franchisees find the right franchise opportunity? Visit&nbsp;<a href="http://www.1851growthclub.com">www.1851growthclub.com</a> and start your journey.

The franchisee group, which already operates over 1,100 units, is growing its portfolio with the quick-service brand, becoming one of SONIC’s largest franchisees.

<a href="https://www.yum.com/wps/portal/yumbrands/Yumbrands/">Yum! Brands</a> is considering a potential sale of Pizza Hut and plans to close 250 underperforming U.S. locations, according to a&nbsp;<a href="https://simplywall.st/stocks/us/consumer-services/nyse-yum/yum-brands/news/yum-brands-weighs-pizza-hut-sale-as-portfolio-reset-accelera">recent article on Simply Wall St</a>. For the franchising industry, the significance is less about the stock and more about what it says about how large franchisors are managing brand portfolios in a high-cost operating environment.<a href="https://1851franchise.com/pizza-hut-franchise-deep-dive-2722519">Pizza Hut</a> is one of the most recognizable names in franchising. If Yum! decides to sell it, that would be a notable shift for a company built on a multi-brand platform. For years, large brand groups have argued that operating multiple concepts creates advantages, including shared resources, stronger purchasing power and the ability to invest in technology across the system. A sale would suggest Yum! believes those benefits no longer outweigh the effort required to improve Pizza Hut’s performance.The planned closures may have the most immediate impact on franchisees. When a franchisor reduces its footprint, it can change how the brand performs in local markets. Fewer locations can mean less convenience for customers, which can hurt overall traffic. It can also weaken the effect of local advertising when there are fewer restaurants supporting promotions in the same trade area.Closures can also affect store-level economics in ways that go beyond the locations that shut down. In some markets, remaining franchisees may pick up some displaced demand. In others, customers may switch to competitors. The changes can also affect local co-op advertising budgets and, depending on how purchasing and distribution are structured, can influence costs tied to volume.The move comes as competition in pizza remains intense, with&nbsp;<a href="https://1851franchise.com/franchise-deep-dive-dominos-pizza-franchise-costs-fees-profit-and-data-2725506">Domino’s</a> and&nbsp;<a href="https://1851franchise.com/franchise-deep-dive-papa-johns-franchise-costs-fees-profit-and-data-2724607">Papa Johns</a> continuing to push delivery, digital ordering and value-focused offers. Simply Wall St notes Yum! has been rolling out its Byte digital platform across brands. If Yum! changes Pizza Hut’s role in the portfolio, it could also change where the company focuses its technology and marketing investment.For franchise systems watching from the outside, Yum!’s review is a reminder that growth is not always the main priority. Sometimes the bigger decision is whether a legacy brand can be improved inside a platform or whether it will perform better under a different owner and a different plan.Read the original article&nbsp;<a href="https://simplywall.st/stocks/us/consumer-services/nyse-yum/yum-brands/news/yum-brands-weighs-pizza-hut-sale-as-portfolio-reset-accelera">here</a>.Want to learn more about how 1851 helps franchisees find the right franchise opportunity? Visit&nbsp;<a href="https://www.1851growthclub.com">www.1851growthclub.com</a> and start your journey.

Yum! is reviewing the brand and closing 250 U.S. locations, a move that could affect franchisees and reshape its restaurant portfolio.

How much can franchisees make? It’s a question many prospective owners ask before investing in a franchise. While earnings tend to be driven by variables such as industry, location and general management skills, a proper understanding of the key factors driving profitability can help franchise owners develop expectations that are realistic.&nbsp;Multi-unit franchisee&nbsp;<a href="https://www.linkedin.com/in/mangesh-patel-9368569/">Mangesh Patel</a>, who’s readying the launch of six&nbsp;<a href="https://www.beefobradysfranchise.com/">Beef ‘O’ Brady’s</a> restaurant locations in the Macon, Georgia area, shares insights from his franchising experience.<h2>Understanding Franchise Income</h2>Keeping operational costs in check can have a major impact on overall earnings. Taking a proactive approach to expenses such as food and labor, as well as payroll and scheduling, can help align actual franchise income with general expectations for the business.“I just had a meeting with a couple of people, and they said, ‘You talked about a 25% profit margin, but I’m only doing 12%.’ So, I looked at the figures they sent me,” Patel said. “Their&nbsp;<a href="https://1851franchise.com/calculate-restaurant-franchise-profit-2730476">restaurant</a> food cost was running at 37%, which should be around 30%. The national average is about 32%. If I do things correctly, my average food cost needs to be at or below 30%. And payroll should run around 18%. But many people run 25 to 28%.”So,&nbsp;<a href="https://1851franchise.com/unraveling-franchise-earnings-how-much-can-you-really-make-2723935">how much can franchisees make</a>? Here are five areas to consider.<h2>Practical Tips for Prospective Franchisees</h2><ol><li>Control Costs From Day One:&nbsp;It’s important to monitor payroll, food and supply costs closely. Overstaffing and inefficiencies can quickly reduce profits.</li><li>Plan For The Opening Surge:&nbsp;Traffic within the first few months of opening is likely to be higher. It’s important to adjust staffing and inventory accordingly, and pay close attention to how those levels change as time goes on.</li><li>Invest In Training:&nbsp;Properly trained workers can help reduce waste and improve overall service, which has a direct effect on net income.</li><li>Understand Your Market:&nbsp;Each market is unique and revenue potential will vary depending upon location, demographics and competition.</li><li>Track Metrics Regularly:&nbsp;Food cost percentages, labor ratios and weekly sales data act as key indicators operations may need to be adjusted.</li></ol><h2>What Profitability Really Comes Down To</h2>Patel notes that if franchise owners manage labor and costs properly, it’s not impossible to achieve strong cash flow even in the first year, bucking some franchising trends.So,&nbsp;<a href="https://1851franchise.com/how-much-can-you-make-as-a-franchise-owner-2724761">how much can franchisees make</a>? While results tend to vary, careful planning, disciplined operations and a proactive approach to assessing initial costs are essential. But by grasping and guiding the elements that drive franchise profitability, franchise owners can maximize overall business earnings, scaling a business that’s sustainable financially over the long term.Want to learn more about franchise opportunities on 1851 Franchise? Be sure to visit our&nbsp;<a href="https://1851franchise.com/power-rankings">Power Rankings</a> to read more on brands making moves.

How much can franchisees make? This guide explains what drives franchise earnings and how to manage costs, with expert tips from multi-unit owner Mangesh Patel on maximizing your franchise income.

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Chapter 1: Breaking Down the Franchising Business Model by Bullets

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