Business Start-up

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29 Gather Information Before Investing in a Franchise

Tho= usands of entrepreneurs have made their mark in the business world by investing in franchises. And for good reason. Franchises prov= ide their owners with a proven, ready-made formula for business success. Althou= gh no business is without risk, franchising enables entrepreneurs avoid some of the difficulties of starting a new venture. There are also the advantages of national brand recognition, funded training and ongoing marketing and management support.

The= most common type of franchising is business format franchising, essentially a blueprint for the building, promotion, operation and products or services. = The franchiser provides guidance for setting up the business, ready-made advert= ising copy and formats, a reliable source of supplies and other services. A produ= ct and trade name franchise, such as an automobile dealership, provides extens= ive research and buying power, enabling the entrepreneur to offer products that= may not be available locally.

How= ever, there are trade-offs. All these benefits come at a cost, usually an up-front fee and a continuing royalty, based on percentage of sales. The entrepreneur may also be required to invest thousands of dollars in equipment and other = start-up needs. Lastly, the franchise owner also relinquishes some autonomy by agree= ing to follow guidelines established in the franchise agreement, which is a leg= ally binding document.

Because no two franchise agreements are alike, you should thoroughly research the requirements of your prospective franchise opportun= ity, even if you already have experience in this type of business. The Internet offers an abundance of information about franchising. A good place to start= is SCORE’s Web site (www.score.org).

The Federal Trade Commission’s Web site (www.ftc.g= ov) has information on federal regulations that affect franchising, including disclosure requirements, disclosure data on specific firms, information on complaints on file, and information about filing a complaint. You may also = call the commission’s Public Reference Branch at 202/326-2222.<= /span>

The International Franchise Association, a trade associa= tion for both franchisers and franchisees, offers a variety of franchise resource books, seminars for franchise owners, networking opportunities and how-to information. You can access franchise information, as well as information a= bout the association itself, at www.entremkt.com/ifa or call 202/628-8000.

The American Association of Franchisees & Dealers ( www.gateads.= com/aafd ) has trademark chapters that represent all of the franchised systems in wh= ich they have significant membership. The organization offers members publicati= ons, discounts and a professional referral network.

Don= ’t be discouraged if your research into franchising produces more questions th= an answers. Franchises are a great opportunity for the aspiring entrepreneur, = but your decision to move forward should be as informed as possible If you would like to discuss this topic or business planning, business growth strategies= or a specific business issue, contact SCORE® “Counselors to America’s Small Business.” To contact the G= reater Binghamton SCORE Chapter 217 for assistance call 607-772-8860 or 1-800 -920= -6972. You may also contact SCORE® for person to person counseling appointment= s at the above telephone numbers. If you are already in business onsite assistan= ce is also available. The Greater Binghamton SCORE® Chapter 217 website is found at www.greaterbing= hamtonscore.org . The national SCORE® web= site is found at www.score.org or sign up = for email counseling at www.score.org