Franchising
Ever dream of owning your own company? If you'd like to be self employed but don't want the hassle of starting from scratch, then franchising might be for you. “A lot of people are taking early retirement and getting into franchising, so we're finding boomers are a new segment in the business,” says Mary Tomzack, the Elmsford, N.Y.-based author of Tips & Traps When Buying a Franchise (Source Book Publications, 1999). And there are a number of resources at your fingertips to help you understand the ins and outs, before signing on.
A World of Options
From fast food joints to tanning salons to cleaning services, there are hundreds of options out there, at varying investment levels. A Burger King or Wendy's could set you back $1 million or more, but there are a number of franchises priced at under $50,000, some in industries you wouldn't expect. For example, for about $10,000, franchisees can buy into Coffee News, a Bangor, ME-based newsletter that's distributed at coffee shops, restaurants, and motels. It's home-based, and franchisees are given the training to learn to sell the ads to local businesses that keep the newsletter free. Eliza J is a 10-year-old company based in Harwich, MA that leases high-quality portable toilets (with air conditioning, music, and changing tables) at weddings and other events. Start-up fees are less than $50,000.
Start with the Trade Associations
The International Franchise Association is a trove of resources, and has a directory of franchises, plus discussion boards where you can hook up with other franchisees and learn from their experiences. Another good resource is the American Franchisee Association. And you might find like-minded entrepreneurs right here on boomster.com.
Figure Out How It Works
Just as you would analyze any business before you bought it, examine the business plan of several different franchises, so you know what you're getting into. And, when you hone in on one or two that specifically interest you, dig deep. Under Federal Trade Commission regulations, all franchisors must file a Uniform Franchise Offering Circular (UFOC), a rich source of information on financials, law suits, bankruptcy — all the nitty gritty details you need to know before going in. That way you'll avoid experiencing some of the horror stories we've all heard or read about. Since franchises cut across dozens of industries, it's almost impossible to nail down a statistic for failure rates among them. But a business news article search on the web or at your local library will yield current news, and often stories about litigation.
Put Yourself Out There
Conventions are one-stop information shops for potential franchisees. MFV Expositions has several big exhibits a year in different parts of the country. The conventions are an opportunity to compare franchises in the same industry, chat up suppliers, pick the brains of the franchise attorneys and consultants who flock there. Fees for such events are nominal, or even free — Franchise Help, run by Mary Tomzack, gives out free vouchers.
Pound the Pavement
It may sound obvious, but it's worthwhile spending a lot of time shopping or, if your target franchise is a restaurant, then eating in various franchises of the chain company you're thinking of investing in. Visit at different times of day, and different days of the week. Do you like the vibe? Is it a place you could envision yourself in? George Ruschhaupt, who owns three The Tanning Company stores in Indiana and plans to buy one more, cased out stores beforehand, which helped him make his decision. “I made surprise visits, and one thing that struck me was that the employees seemed to be enjoying themselves and having fun,” he recalls.
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