 Opportunity Knocks With a Franchise Business
Is There a Franchise That's Right for You?
What's Involved in Buying a Franchise
For some people, buying a business franchise is an ideal way to start a small business and become self-employed. Starting a new business on your own is often risky. On the other hand, owning a franchised business gives you a running start to success. You can take advantage of the work that has gone into building the brand. The franchise company provides business knowledge and training, a past record of success, effective advertising and strong brand awareness that would take years for a new business to develop on its own. The franchiser, whether it is McDonald’s or Merry Maids, offers an established business plan, a chain of suppliers, a full line of products, knowledgeable training, proven store design, location analysis and marketing strategies.
Don't aim for success if you want it; just do what you love and believe in, and it will come naturally. ~David Frost
 The Strengths of a Franchise Business
The franchisee, that's you, pays an initial franchise fee to buy the rights to the business, and pays monthly royalties based on the gross revenues. The franchisee may also agree to purchase inventory and supplies from the company, and to follow the prescribed rules and business practices. Like any business, the franchisee will need working capital for the day-to-day operations of the business. The franchisee generally has very little leeway or independence in how the business is operated. When you opt into a proven franchise business, you do give up some freedom to innovate and experiment, because you become part of the franchise company.
Who Makes a Good Business Owner?
The most successful franchisees, that’s you, are people who are enthusiastic and dedicated to the business. They are expected to work hard and to take responsibility for the success of the business. Getting along with people, managing employees, and learning to run all aspects of the business are all skills that improve your chances of success.
The Launching Pad or How to Get Started
- Decide what kind of business you have the skills and interest to make a success. Evaluate several franchises in your field of interest.
- Check out the costs of the business, including the franchise fees, royalty fees, advertising fees.
- Ask yourself how much control you want to have.
- Determine what it will take to terminate the franchise or to renew it periodically.
- Choose a franchise that will help you meet your personal goals as well as your financial goals.
- Get family members involved to support you in the business.
- Investigate how much demand there is for the products you’ll be offering.
- Check out how much competition you’ll be facing in your locale.
- Ask yourself if the franchiser will provide enough value to justify the franchise fees they require.
- Look into the training and support the company provides.
- Talk to other franchisees of the company for advice and information.
- Find out what you can expect to earn from the business.
- If you are considering buying a franchise, prepare yourself by hiring on as an employee at one of their stores. You’ll learn the business from the inside out, and have a better idea of how to run your own store.
- Evaluate the best location for your business.
- Negotiate for an exclusive territory so the same franchise cannot open nearby.
- Line up your finances for the venture, whether you will use personal savings, borrowing from friends, a small business loan from a bank, a second mortgage on your home, outside investors, or a loan from the U.S. Small Business Administration.
- Prepare your personal financial statement.
- Ask the franchisers for the UFOC, the Uniform Franchise Offering Circular, a detailed disclosure document they are required by law to provide. It will contain all the details to help you evaluate the business.
- Take time to read and fully understand the terms of the UFOC, the franchise agreement, the property lease and other contracts. Review these documents with an attorney who specializes in franchises.
Every franchise requires time, dedication and a strong financial commitment. It may take months and even years before your new franchise business becomes profitable. Uncertainty is the nature of all business, so lay out a financial plan for the worst-case scenario.
Flaming enthusiasm, backed up by horse sense and persistence, is the quality that most frequently makes for success. ~Dale Carnegie
The Choices Are Endless
Here are some popular franchise opportunities.
- 7-Eleven, the well-known convenience stores has more than 25,000 franchised stores in operation throughout the country. The initial franchise fee is about $107,000 plus a capital investment of $164 for store inventory, supplies, etc.
- Ace Hardware, the retail hardware chain is growing as the do-it-yourself homeowner takes on remodeling and home improvement. There are over 4,600 franchise units of “Ace, the Helpful Place.” The initial franchise fee runs from $600,000 to $1 million, plus a capital investment.
- Auntie Anne’s Hand-Rolled Soft Pretzels (yum, yum) has over 800 franchised stores in malls, airports and other high traffic areas. The initial franchise fee is $30,000 and the required capital investment is anywhere from $192,000 to $380,000.
- Merry Maids is the leader in residential home cleaning. Their franchise fee is $20,000 to $30,000. They already have 1,430 franchises, but are still growing.
Famous Franchise Businesses
Often a familiar company name turns out to be a franchise opportunity you didn’t expect. It is surprising how many successful businesses offer franchises.
- Carlson Wagonlit Travel
- CertaPro Painters
- Geeks On Call
- Gymboree Play Programs
- Jenny Craig weight loss program
- Kumon Math & Reading Centers for youngsters
- Lawn Doctor
- Midas the brake and automotive repair specialist
- Re/Max International, a very successful chain of real estate agents in the United States and 60 other countries
- Subway Sandwich Shops where you can “eat fresh”
- The Coffee Beanery for specialty coffee beverages
- The UPS Store, formerly Mail Boxes, Etc. for packing and shipping
- Curves Fitness Centers for women only
- Jackson Hewitt Tax Service for income tax preparation and tax anticipation loans
- Dunkin’ Donuts
- Domino’s Pizza
- Pizza Hut, Inc.
- Sonic Drive-In Restaurants
- Century 21 Real Estate
- McDonald’s the granddaddy of all franchises
- ServiceMaster Cleaning
- Jiffy Lube International
- Arby’s
- Baskin-Robins for ice cream treats
- KFC Corp with its “finger-lickin’ good franchises
- Cold Stone Creamery for fresh ice cream
- and Jazzercise the workout and fitness program
- Blockbuster
- Burger King
- Wendy’s
- Coldwell Banker Real Estate
- Circle K Stores
- Marriott Hotels
- Taco Bell
- Holiday Inn Hotels
- TruGreen ChemLawn
- Hooters
- Pearle Vision Centers
- and Sbarro Italian Eatery
Hit the Books and Web Sites
You’ll find more information about franchises in the industry publication Franchise Times, Entrepreneur Magazine, Franchise Update magazine. An online university, IFA University sponsored by the International Franchise association, offers online courses about franchising. Their online course “Introduction to Franchising”, offered free of charge, is an excellent starting point to see if franchising is for you.
By this time next year, you could be building a business, and building wealth for yourself.
My wish is that your life brings you much success. I hope you have a very happy day.
-----Surfer Sam
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