The Franchise Business Model and the Factors Contributing to its Success

Abstract

As the U.S. economy has grown and progressed since its establishment as an independent nation, it has evolved to incorporate different new ideas and systems. One such system that has been steadily growing in popularity since the beginning of the 20th century is that of the franchise business model. This business model represents a stark alternative for entrepreneurs to the traditional foundation of independent businesses. The purpose of this paper is to define what the franchise business model is, why it has been successful, and how it differently incorporates certain business concepts in comparison with a traditional independently owned business. This will mainly be done by examining the advantages and disadvantages of the franchise business model, and through a few select case studies of the success factors in individual franchises. Although this paper will draw from a wide variety of concepts related to the fields of economics and business, the main themes we will see throughout are entrepreneurship and value as they relate to franchises and non-franchises alike. It is the judgment of this author that the franchise business model makes entrepreneurship more accessible to the common investor, the American citizen, and therefore has met success and growth in the U.S. as well as foreign economies and will continue to do so domestically and internationally.