I wanted to be my own boss... I didn't want to work this hard for somebody else any more... I was tired of the corporate culture, and wanted something of my own. Do any of these words sound familiar? These are the voices of franchise entrepreneurs--people who have made the leap and gone into business for themselves as owners of franchised small businesses.

Maybe you will join the ranks of those who choose not to wait for downsizing to catch up with them. If you've always wanted to run a small business of your own, you may find that in a franchise, you can jump over some of the hurdles to business ownership. This is because when you invest in a franchise, you are paying to receive training in all aspects of how to run that business. You also are paying to jump-start your name recognition--in a franchise business, you pay for the right to use the franchisor's trademark(s). Pam's Hamburgers might not be a household name, but Wendy's Hamburgers certainly is. If I sign a franchise agreement with Wendy's, I've obtained a license to use the Wendy's name and logos. 

What is a franchise, exactly? Isn't that just another name for a large chain of stores? Not necessarily. Some chains are not franchises, although it could be said that all franchises are chains. A franchise could be defined as a contractual business arrangement, in which a franchisee buys from the franchisor the right to conduct a business or sell products and/or services, using the franchisor's marketing plan and trademarks. Generally the marketing plan you receive should include substantive training prior to opening, some ongoing training after you have begun operating the business, plus a comprehensive operations manual to guide you in the day-to-day routine.

These days you read about franchising as a can't miss proposition. If you can get the initial investment together, you are practically guaranteed success. Ever hear the expression, if it sounds too good to be true, it IS?? Franchising is by no means a guarantee that you will make money, or even that your business won't fail. There are pitfalls to be wary of in franchising just as there are when you start up your own business from scratch. These can include: 

--not reading the fine print--or not understanding the legal work of art that is a franchise contract, even if you do read it!

--over-saturation of your market--the franchisor might not give you a protected territory and may just put up additional stores too close to yours

--failure of the franchisor to provide ongoing support or advice as promised

--little or no control over your advertising dollars

--outgrowing the franchisor: after you've been trained and successfully operated the business for four or five years, what do you need with the franchisor--and those royalty payments?

How do you deal with these pitfalls? Due diligence, that well-worn phrase, which means do your homework--and then do it again a few more times, with a qualified team of assistants--before you buy. 

Having an attorney who specializes in working with franchisees or prospective franchise buyers go through the contract is an absolute must--don't just let your family lawyer read it. 

This is a highly complex area of law, and you deserve to have quality advice before you plunk down your life savings. And even before you get to the attorney, have a franchise consultant assist you with locating, evaluating and selecting a franchise. You'll save some legal fees if you only go to the attorney when you are 90% sure this is what you want, and a good franchise consultant can help you get to that point. 

If you have done your homework and found a reputable, quality franchise to invest in, franchising does offer certain aids to reduce your risk factor: a proven business system, significant training and ongoing advice, possible group purchasing cost savings, "built-in" customer goodwill, and a support network of other franchisees in the same business. And a good franchisor will help deal with that last pitfall mentioned above: the franchisor can act as your "Research & Development" arm--providing you with innovative ways to stay ahead of the competition in your chosen industry. With that franchisor, you'll be getting value for your royalties throughout the whole length of the franchise term. 

And speaking of chosen industry, what kinds of businesses are franchised? And what kind of costs are we talking about? You will be amazed, when you start looking into franchising, at just what kinds of businesses are available as franchises... everything from wild bird seed retail stores, to property management, to private autopsy services. (I kid you not.) And there are enormous differences in investment levels too, so don't think that just because you can't afford to invest in a McDonald's you can't afford a franchise. Some franchised service businesses are even home-based, saving you the cost of a retail build-out. You will need to be able to invest at least some of your own money, but the rest of your franchise purchase can be financed. 

To start wading through this sea of information, get a franchise directory (a good one is called "Bond's Franchise Guide" available from Source Book Publications, 800-841-0873). Start looking into industry areas that interest you, and that might meet YOUR needs and expectations. For a free "getting-started" information packet, call PS Consulting at 800-377-0504 or write to PO Box 741, Oceanside, CA 92049. E-mail: FranchisMe@aol.com or visit http://members.aol.com/Pingui/indexp.html to learn more. 

Copyright 1997 PS Consulting. All rights reserved.