Ask the Expert:

Should I Buy a Franchise Straight Out of College?

MODERATED BY JOHN WALSH

Q: Do I have the tools I need to successfully run a franchise straight out of college?
A. Owning a successful franchise involves much more than paying your franchise fees and waiting for money to roll in. Those who select an industry in which they have some knowledge will enjoy an advantage over their competitors who don't. Practical business know-how is also a plus, and an aptitude for dealing with customers and employees is crucial. Finally, enough savings (or ready access to affordable credit) to weather cash flow challenges is fundamental to your success (and your ability to sleep at night!).

Q: What knowledge can predispose me to success with my franchise?
A: Many college graduates do not have much work experience. It is harder to run a business if you have never worked as an employee. You might want to work at a branch of the business you are considering purchasing as an employee first. If you have worked in your franchise's industry during summers or part-time during the school year, though, you already have valuable knowledge about the tasks and responsibilities of a franchise owner. Courses in business and accounting while you are in college also give you a good foundation for running your business.

Q: Am I mature enough to manage a staff?
A: One of the hardest parts of managing a company is hiring and training your employees. As a recent college graduate, you might find that your entire staff is older than you are. You must feel comfortable and confident giving directions and addressing disciplinary problems.

Q: How can I find the money for the franchise fee?
A: Starting a franchise can be expensive, and recent college graduates are not always on stable financial ground. Many graduates emerge saddled with student loans and with very little savings. Often, recent college graduates pay their franchise fees using loans from their family or from a bank. In addition to the fees, graduates should have a cushion of either available credit or savings.

Q: How patient will I need to be with my new franchise business?
A: It can take several years before a franchise gets really successful. You should be willing to work hard, live frugally, and wait patiently for your business to gain its footing. It's a good idea to have saved a few months' of living expenses before starting your franchise, to lessen the chance that a slow start would cripple you financially.