Are you eager to start a small business but worry that a lack of resources and/or experience will doom your entrepreneurial dreams? Then consider franchising, an approach that thousands of people from all walks of life have transformed into highly successful enterprises.
A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group wishing to use that identification in a business. Generally, a franchisee sells goods or services that are either supplied by the franchiser or meet the franchiser’s quality standards.
According to the International Franchising Association, the U.S. has more than 900,000 franchising businesses in more than 90 categories. Franchised businesses generate $2.31 billion in economic output each year.
What sets franchises apart from other types of small businesses is that the franchisor does much of the “up-front” work, providing franchisees services such as site selection, training, product supply, marketing plans, advertising, and even financing.
Best of all, franchisors don’t simply leave their franchisees to fend for themselves when times get tough.
“The beauty of a franchise is that you get the experience and support of people who have been through tough times,” says Jania Bailey President and COO of FranNet, the nation’s leading franchise consulting organization, franchisors. “The franchisor is there to help with suggestions and systems that have worked in prior economic downturns.”
Don’t look at franchising as a short-cut to entrepreneurship, however. Research and due diligence is a must for any prospective franchise owner.
That includes fully understanding the Franchisor’s Disclosure Document, which discloses information about the franchise organization, and the Franchise Agreement—the actual contract between franchisor and franchisee. Watch for specific requirements such as sales quotas; mandated sources for equipment, supplies, and inventory; and conditions for terminating the agreement.
It’s also helpful to interview some of the company’s current and past franchise owners to gauge the level of support they receive.
Bailey also advises prospective franchisees to plan for the long-term, and partner with franchise organizations that have the same perspective.
“A franchisee needs to have a well thought-out personal business plan with long- and short-term goals, and then look for a franchise that matches up with them,” she says. “Also, they should pick a franchise that has a good track record of growth, and increased earnings at the franchisee level.
You’ll find a wealth of small business-related information, resources, and training, plus free, confidential counseling from more than 13,000 business experts. For more information contact the Lake of the Ozarks SCORE Chapter at http://www.lakeoftheozarks.score.org/, by e-mail at firstname.lastname@example.org or call 573-346-5441.
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