Start a Home Based Internet Business

Franchise - Do's and Don'ts

A franchise is a simple way for an entrepreneur to start a business with a built-in market and proven product. A franchise is an excellent opportunity for an individual with little or no business experience. Your technical and business support system exists from the very beginning. The success rate for an established franchise is much higher than for the independently created business. But it is not for everyone, and it is not a get rich quick scheme.

Do:
Investigate Franchise Opportunities - Visit a franchise trade show or join a webinar to find out about the product or service. Contact as many franchisees as possible.

Talk to present owners of the franchise - Ask them if they are pleased with their franchise and the level of support they receive from the franchiser. Find out if the training is adequate. It is important to know that you will have receive strong initial training and immediate technical assistance when a problem comes up.

Consult any and all advisors you feel can help you - Let your accountant review the financial statements that are provided and have your lawyer review the franchise agreement. Make sure you understand what each document is stating.

Read the Uniform Franchise Offering Circular (UFOC) - This is a disclosure document that the Federal Trade Commission requires all franchisers to supply to prospective franchisees. The document requires the franchisers to disclose certain specified information. Ask as many questions as you can. Confirm and challenge the information provided to you.

Compare other franchise systems in the same field - You want to make sure that the franchises you are considering are solidly managed, well financed and are in a position for growth. You should investigate regional as well as national franchise opportunities.

Ask yourself if franchising is right for you - Some people consider owning a franchise as just being a job transfer because of the restrictions and regulations of many franchisers. Typically, buying and owning a franchise can also have a higher cost.

Research, research and research again - Buying a franchise business is a complex process and should be approached with caution. The more information you know, the better your decision will be and the less risk you will be exposed to. Only you are going to be able to determine if a franchise opportunity is right for you. You will most likely base your final decision on the level of your investment and the risk capabilities for both you and the business opportunity.

Don't:
Hurry - Don't skip or shorten your research. This will only increase the likelihood of failure. As with many businesses, timing and the ability to calculate risks play a major role in selecting a franchise that's right for you.

Overextend your finances - When researching franchising, remember that the more established a franchise, the less risk it carries but the investment will be much higher. Such established franchises as Pizza Hut and McDonald's requirement a significant investment. Even some home-based franichses may have royalty fees that are too steep to justify the amount of money you can earn from running a one or two person business. Always plan that the expenses will be more than you orginally anticipate.

Skip consulting the professionals - The franchise agreement is typically a lengthy, complex legal document and should be reviewed by your attorney before you make any commitment. Don't try and save yourself a few dollars by not hiring an attorney to review the information because you might miss some critical information.

Take anyone's word that it's a good or bad opportunity - This is your risk and your business opportunity, don't let someone else make the decision for you. Look at current marketing trends with the industry you are interested in for potential weaknesses such as price wars. Take into account economic factors and changes in society, such as an aging population, that could impact the industry.

It's important that you research the franchise business you want and not just settle for the first opportunity that comes along.