Your Future in Franchising

Franchising 101

By LEANNE BEATTIE

Owning a franchise is a terrific way to make a living, but it's not easy walk in the park. There's a lot of work involved - from finding the right franchise opportunity, to financing the business and finally, operating the franchise day in and day out.

There are thousands of franchises available and any number of them could be a good fit for your needs. As you're researching those that interest you the most, be cautious - don't leap into any endeavor without having all the facts. By doing your due diligence now, you'll have a much greater chance for success in whatever franchise you select.

While searching for the right franchise, it's a good idea to limit your search to franchise systems that work with and recognize an independent association of franchisees. Issues are bound to develop in your relationship with your franchisor and having a powerful franchisee association on your side ensures that any problems can be solved as they occur.

Know Your Rights

A positive and fair relationship between you and your franchisor is absolutely necessary at all times. To answer this need, the American Association of Franchisees and Dealers has developed a detailed "Franchisee's Bill of Rights" which outlines the minimum requirements of a fair and equitable franchise system.

As a franchisee, you have many rights, including the right to equity in the franchised business and the right to the franchisor's loyalty, good faith and fair dealing. You also have the right to due care in the performance of the franchisor's duties, the right of full disclosure of financial information from the franchisor and the right to ongoing support. To learn more about the complete "Franchisee's Bill of Rights", you can visit the AAFD website at: http://www.aafd.org .

Develop a Consulting Team

The franchise system can be complicated, so it's necessary to have the right people around you to give advice and assistance as you begin your business. You can put together your own team of "personal consultants" to help you understand the requirements of your franchise and get you off to the right start. This team should include a qualified franchise attorney, accountant, banker and a business consultant. If you don't know how to find these people on your own, your local Small Business Development Center can help you find the right people to suit your needs.

Resist the urge to try to save money in this matter by doing it all yourself. This is not the time to cut costs-in fact, not assembling a consulting team is a recipe for disaster. Given the cost of your potential investment in the franchise opportunity, you can reasonably expect to shell out 2-5% of your total investment in knowledgeable, professional assistance. Building a successful consulting team won't guarantee your franchise's success, but it will maximize your chances of success.

Research your Options

Detailed research is necessary to start a modern franchise. Begin by asking yourself what kind of things you like to do and what you want to accomplish by owning a franchise. If your prime motivator is money, tailor your search to the most profitable types of franchises, even if you've never considered them before. You must also consider how the market is performing right now. What type of business would have the greatest chance of success in this market?

Any franchise you are considering should produce and market quality goods or services with an established market demand-evaluate your franchisor's business plan and marketing system to learn exactly what they're offering their franchisees. A well-established, well-designed system will give you complete training and substantial support.

Ask the Hard Questions

Learn all you possibly can about a franchise before you consider investing in it. Remember-your future happiness and financial well-being are on the line here. Ask the hard questions and get all the nitty-gritty earnings details. If a franchisor balks at giving out that sort of information, move on and find someone who is willing to back up their marketing materials with cold, hard data.

The more you learn about franchising and the franchise selection process, the more you will understand what a franchisor is really offering you. The time you spend now doing an in-depth investigation, coupled with the costs you must incur for expert professional assistance, are simply investments in your future that may save you from making a very costly mistake.

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