Want to expedite your way to entrepreneurship? Investing in a franchise may be the way to go. There are already more than 828,000 franchised establishments in the U.S. according to the International Franchise Association (IFA). They span nearly every type of business imaginable, from restaurants to fitness centers, from printing services to lawn care.
One source of franchising’s appeal is that much of the up-front work has already been done. The franchisor has developed and refined the concept, created a recognized brand, established supply channels, and formulated work processes. Often, they also know what markets are ripe for expansion, which is where franchisees come in.
That doesn’t mean one simply buys a franchise, sets up shop, and starts making money. As with any new business venture, you need to learn as much as you can about the franchising companies you’re interested in, and what your specific responsibilities are, including your financial commitment. You may need to prepare a business plan to secure outside financing to get started, much as someone building his/her own business from scratch.
The IFA recommends gaining a complete understanding of the business and the type of experience required to operate it; the franchisor’s financial condition and business track record, particularly in recent years; the costs to purchase and retain the franchise once it’s operational; and performance expectations.
Much of this information may be found in the Uniform Franchise Offering Circular (UFOC), a disclosure document that every franchisor is required to provide prospective franchisees. You should review both the UFOC and the proposed franchise agreement carefully with your attorney and accountant.
Also investigate how other franchisees are doing, and what they’re relationship is with the franchisor. Visit their facilities and watch how the operations work, then interview the owners personally to find out about their experiences, particularly the franchisor’s support in handling problems and promoting growth.
More guidance for researching and purchasing franchising may be found at the IFA’s website, http://www.franchise.org, which also contains a database of more than 1,100 franchise opportunities. Another valuable resource is the Federal Trade Commission (www.ftc.gov), which offers numerous information pages and publications designed to help prospective franchisees make informed decisions.
To learn more about starting and growing a small business, contact Raleigh SCORE. We provide free, confidential business mentoring and training workshops to small business owners. To schedule a free appointment with our experienced counselors, go to http://raleigh.score.org, or call us at 919-856-4739.