Q: I will be retiring this year at age 60 and intend to fulfill my lifelong dream of owning my own business. I'm too old to start from scratch, so I'm looking at several franchise opportunities, including fast food, auto parts, and an accounting service. What should I consider before choosing one? Anthony R.
A: Congratulations on the retirement, Anthony, and on the new business venture. As the old adage goes, when one door closes, a drive-through window often opens (or something like that).
Given the franchise types you are considering the first thing you should ask yourself is whether or not you want to spend your golden years cooking fries, selling mufflers, or doing taxes.
Franchising can be a great way to start a business career, but you should make sure you're not just trading one job for another. Unless you plan on being an absentee owner, which I highly discourage, you are gong to be working in the business just as an employee would, so be sure the business you choose doesn't turn your lifelong dream into a never-ending nightmare.
The primary advantage of buying into a franchise system is that it allows you to enter business quicker with a proven system, while minimizing risk and increases the odds for success.
The primary disadvantage is that you give up considerable freedom in how the business operates. In many ways franchisees are not really their own bosses because they are required to follow the rules set down by the franchisor.
Many franchise owners also quickly tire of asking: "Do you want fries with that?" and become absentee owners, which usually leads to the business being sold or shut down.
No matter what franchise you're considering, you should ask yourself the following questions before making a decision:
* Do you have past experience that pertains to the type of franchise you're thinking about buying?
* Are you prepared to work long, hard hours?
* Are you an effective manager?
* Are you willing to share your revenue with the franchisor?
* Are you willing to follow the franchisor's rules and regulations?
* And the biggie: do you have access to the necessary capital to invest in the franchise?
The big franchises like McDonald's and Midas Muffler can cost hundreds of thousands of dollars to buy into, but unless you are a total business savant, the franchise is virtually guaranteed to succeed.
It's true that even a McDonald's closes on occasion. Roy Croc spins in its grave when it happens, but happen it does, so keep that in mind. There are thousands of lower cost franchises that you can buy into, but the lower the investment typically means the risk of success is higher.
As a rule, franchise operations are generally more successful than independent startups because they have a proven concept, a ready market, an established customer base, and a business model that can be replicated over and over again. Less than 5% of franchises fail during the first few years as compared to an 80% failure rate of independent ventures.
Many people have done very well as franchisees and often end up with multiple franchise operations. Adversely, many have not done so well because they bought into a franchise system that either was not all it was purported to be or they discovered that they did not fit into the franchisee's mold.
The key is to pick the franchise system that is right for you. Here are a few tips to help you do just that:
* Purchase a franchise that complements your skills, work experiences, and interests. Don't start a business in a field that is totally foreign to you.
* Plan on becoming an owner-operator versus an absentee owner. Absentee owners lose control and interest quickly and the franchise suffers because of it.
* Gather as much information as you can about the franchises you are interested in. You are considering investing a lot of money to buy into a system, so know who you are dealing with and what you are paying for.
* Experience the product or service firsthand, as a customer would. If you don't like the service you get at McDonald's, don't invest in a franchise thinking you can fix their problems and run things better. You can't and you won't.
* Interview other franchisees to gauge the franchisee satisfaction level.
* Ask how many franchises have closed and for what reason.
* Ask about initial and long-term training and support.
* Make sure the franchisor is profitable and financially sound.
* Finally, do your due diligence. Request a disclosure document that includes in-depth information about the franchisor and if a franchisor refuses to produce such a document, take that as a huge red flag and mark them off your list.
Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox.
http://www.prosperityandprofits.com
http://www.smallbusinessqa.com
http://www.dropshipwholesale.net
Remember those drawings from science class of how a lever... Read More
1. Leadership Is Learned ? While many people appear to... Read More
In the first article we mentioned the main characteristics that... Read More
When you go into business for yourself, there are many... Read More
There is a great deal of abuse going on in... Read More
Many small business startups fail within the first 2 years... Read More
We visited Lexus USA, home of the Lexus North America... Read More
Last week's question from Anthony R. on how to choose... Read More
The day care industry is expanding. There are now more... Read More
Before you read any further in this article, I'd like... Read More
Just as you are about to say "good-bye" to your... Read More
As a solo entrepreneur or small business owner, one of... Read More
I only have to point to the 555 plus failed... Read More
Company mottos can easily be printed on a business card.Sometimes... Read More
The FTC Franchise Rule maybe changed, as the Federal trade... Read More
Small business owners often enter their field with great expectations.... Read More
Many ventures are faced with the challenging task of raising... Read More
Here are some useful tips on what to consider before... Read More
One of the most common horrific mistakes a business can... Read More
Are you a motivational speaker who consistently gets rave reviews... Read More
Writing a business plan for a mobile car wash is... Read More
Is your business making money? Would you know?Figuring out whether... Read More
It is most fascinating to study how entrepreneurs spot opportunity... Read More
I am simply amazed at the problems some of my... Read More
Washing manufactured homes, mobile homes, can be a lucrative and... Read More
The Federal Trade Commission which governs the franchise industry thru... Read More
I agree that knowledge should be free, but the next... Read More
Most small businesses incorporated in 2005 will fail by the... Read More
Here are a few tips on how to hand out... Read More
Many smaller businesses choose niche markets for various reasons and... Read More
The book, "Become the Squeaky Wheel," by New Hampshire author... Read More
The Federal Trade Commission decided to sit down and revamp... Read More
Would you rather have one good client paying you five... Read More
As a franchisor I am always asked by new and... Read More
KEEPING INTEREST HIGH: Supervision is key to the success of... Read More
Disclosure laws in franchising are suppose to help the consumer.... Read More
In today's fast paced marketplace it is easy to neglect... Read More
We visited Lexus USA, home of the Lexus North America... Read More
Starting and growing a small business can be a daunting... Read More
There have been many great points raised on both sides... Read More
If you own a mobile service or home based franchise... Read More
Get maximum results with minimum effort. Sounds great doesn't it?... Read More
Just when the entire state was kissing Wichita goodbye, economically... Read More
Why are we over regulation the franchising industry, what purpose... Read More
If you own a mobile car washing, pressure washing or... Read More
Contrary to popular belief, small businesses can survive a crazy... Read More
You may find this Newsletter a little long winded but... Read More
If you own a Pressure Washing Company and wish to... Read More
Seems as though there are a lot of business closings... Read More
Imagine that you have operated a successful franchise business for... Read More
Just a few years ago, when one thought of a... Read More
Why does research and education play an important part of... Read More
The way you manage your money is one of the... Read More
Pardon my enthusiasm, but a large part of your small... Read More
In this series of articles I'm going to show you... Read More
Here are some useful tips on what to consider before... Read More
As I am preparing for my attendance to the CoachVille's... Read More
You are probably hard at work promoting your business (and... Read More
The Federal Trade Commission is upgrading the franchise law and... Read More
-- Building Credibility Through Success Stories --Successful solo entrepreneurs spend... Read More
I frequently give presentations at small business gatherings, providing me... Read More
Essentially there are 5 tremendously powerful methods to make money... Read More
Traditional advertising methods are still being used for almost 90%... Read More
You've probably heard the statistic that 95% of small businesses... Read More
As a home business proprietor, you may already realize why... Read More
Everyday, customers and business owners are bombarded with billboards, logos,... Read More
Small Business |