At SCORE we usually provide advice to entrepreneurs interested in starting a business. An entrepreneur has a business concept or proposition in mind. Interestingly, we often meet with folks who do not have a specific venture in mind but do have a strong interest in starting a business. We steer those folks to the business brokers in town to discuss the availability of existing businesses that may be of interest.
There may be another alternative, and that is to evaluate opportunities to acquire a franchise business. According to the International Franchise Association, franchised businesses are growing at a rapid pace. Some 400,000 franchised businesses now employ nearly 10 million people with a payroll of $230 billion.
There’s always a hot new franchise on the scene. Curves, for example, a network of franchised women-only fitness centers, grew nearly 38 percent in a single recent year.
Consider contacting FranNet. FranNet itself is a franchise, and it offers a no-cost assessment tool that helps evaluate whether a client has the acumen to operate a business successfully. FranNet represents more than 200 franchises. Its assessment process evaluates a client’s interests, experience and availability of finances, allowing FranNet to suggest several franchises from its portfolio. To learn more, visit www.frannet.com/pnicol.
Buying a franchise provides the new owner tested concepts and proven operational and marketing strategies, as well as the franchiser’s institutional knowledge and guidance.
But franchise ownership isn’t an easy shortcut to success. As with any small business, it’s up to you to commit the finances, time and effort to meet both the franchiser’s goals and your own. That’s why it pays to weigh the pros and cons of franchising to make sure it’s right for you.
As you research franchises, ask about the required experience, if any, as well as the expected hours and personal commitment necessary to run the business.
You also should learn about the franchiser’s background. For example, what is the company’s track record? How are other franchisees in the system doing? The upfront cost of buying the franchise is crucial, of course, but so is how much you’ll pay for the continuing right to operate the business and what products or services you will be required to buy from the franchiser.
The “Franchising Basics” section of the International Franchise Association’s website, www.franchise.org, offers extensive information on how franchising works, online discussion forums that cater to prospective owners, and a searchable database of more than 1,200 franchise opportunities.
If you’re considering applying for a loan backed by the U.S. Small Business Administration, visit the Franchise Registry at www.franchiseregistry.com. This service lists names of franchise companies whose franchisees enjoy the benefits of a streamlined review process for SBA loan applications.
Anyone considering purchasing a franchise should develop a business plan. Many prospective buyers often assume the assessment and application process is a substitute for a business plan. While the information made available by the franchiser or his agent will be helpful, due diligence should be exercised to balance the positive spin typically presented by the franchiser. Buyer beware.
tvscore240@yahoo.com
C. NORMAN BECKERT Idaho district director for SCORE, the Service Corps of Retired Executives
