Question: For years I have wanted to have my own small business, but I don’t have endless funds and am unsure of what would be the most beneficial business for me to go into. Can SCORE make some suggestions for a profitable business consideration?
Answer: Many entrepreneurs consider starting a small business but worry that a lack of resources and/or experience will doom their entrepreneurial dreams. If that’s you, 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. “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.
Among the things you must explore is 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. Be aware of specific requirements such as sales quotas; mandated sources for equipment, supplies, and inventory; and conditions for terminating the agreement. Being fully aware of the situation will save you headaches down the road.
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.
Register now for Introduction to Using Social Media for Business, Saturday, June 8, 2013, at the Cottonwood Business Assistance Center, 821 N. Main St. $25 per person. Eddie Leonard, retired Senior Vice President of Brand Marketing for America Online, Inc. (AOL) presents. Eddie shares real-world experiences from the perspective of the Internet business user/consumer. Go to http://northernarizona.score.org/localworkshops. Questions? Call Howard LaPittus at 928-778-7438 email: firstname.lastname@example.org.