Archived Story

Franchise option may be the way to go

Published 10:56pm Saturday, March 9, 2013


Have you thought about starting a small business but worry that a lack of resources and/or experience would doom your entrepreneurial dreams? You might consider franchising, an approach that thousands of people from all walks of life have transformed into 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 United States 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 sometimes 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. “The franchisor is there to help with suggestions and systems that have worked in prior economic downturns.”
Don’t look at franchising as a shortcut to entrepreneurship, however. Research and due diligence are a must for any prospective franchise owner.
It is key to fully understand 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), franchise fees. royalty payments and conditions for terminating the agreement. Look to an attorney and possibly a CPA for assistance.
It’s may be helpful to interview some of the company’s current and past franchise owners to gauge the level of support they receive.
Since franchise agreements are long-term, be sure that your long-term objectives parallel those of your franchisor.
“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,” Bailey says. “Also, they should pick a franchise that has a good track record of growth, and increased earnings at the franchisee level.”
SCORE is a national, nonprofit organization that offers confidential and free counseling to small businesses. In the greater Washington area, contact SCORE by leaving a phone message at 252-974-1848, by visiting the website at or visiting the office on Tuesday and Thursday mornings in the JobLink building, 1385 John Small Ave., Washington.

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