Franchising is the practice of using another firm’s business model. For the franchisor, the franchise is an alternative to building ‘chain stores’ to distribute goods that avoids the investments and liability of a chain. For the franchise owner who provides the capital and commitment the franchise is an opportunity to get into business for themselves, and ideally not by themselves. The franchisor’s success depends on the success of the franchise owners. The franchise owner is said to have a greater incentive than a direct employee because he or she has a direct stake in the business. For information about the history of franchising click here.
There were over 828 thousand franchised business establishments in the United States. Franchised businesses provided over 9 million jobs, or approximately 6% of the U.S. workforce in 2007 (International Franchise Association Economic Impact Report). The economic impact of franchise operations in Maine is substantial. There are over 3500 franchised units in the State of Maine that directly employ over 38,000 Maine citizens with a payroll that exceeds $1 billion and a GDP approaching $4 billion. (Maine Economic Impact Report).