In the course of a person’s life, at least once or twice, the thought of owning their own business has crossed their minds. The idea of independence and not relying on someone else to control the paycheck is the dream of many.

So what is keeping the vast majority from realizing that dream? Well, for starters, most of us do not have a new product or service that we can offer the buying public. And if we did have something worthwhile to offer, many of us doubt if we have the ability to run a full service business, as we have had no experience or training.

Is there an answer to this dilemma? Yes, there is and it comes with the purchasing of what is known as a “franchised business.”

What is a franchised business? A franchised business is like owning a small portion of a larger business. In fact, you could say most large businesses in our world today are franchised businesses (though most are not) when you consider how many small businesses it takes to comprise the big business.

A franchised business gives you the advantage of sharing the expertise of a business that has already been established and has experienced the ups and downs of getting the business off the ground. With a franchised business you get all the nuts and bolts in place and you get the direction you need to be a success.

As a franchise owner, you get to keep the majority of the profits and pay the Parent Company a “royalty fee,” as you are paying for what could be called a copyright allowance. This fee gives you the right to literally ride the coat tails of the Parent Company’s reputation, regarding its product and/or service.

The Parent Company (the franchiser) has the responsibility to provide the marketing tools to the new franchise owner (franchisee) and gives the franchisee the right to market, sell and distribute the franchiser’s products and/or services. They will offer support, training, organizational help, and management expertise.

Depending on the franchise you are interested in buying, most product materials will have to be bought from the parent company (ex. McDonalds,) while other start up costs and possibly equipment will have to be purchased on your own, as well as the building you will be using.

What are some of the things you should be thinking about? Before you start any venture, you need to do your research and think about what your likes and abilities are. Buying a franchise is a long-term commitment of money, time and a great deal of energy. It is said, that when you go into business for yourself, “you will work harder than you ever have before.”

It is important to do research each and every franchise you are considering, talk to other franchise holders, talk to competitors, contact a franchise broker and/or a franchise consultant. Leave no stone unturned before you commit.

Some Parent Companies require large start up fees and annual fees, along with the royalties that must be shared. This is why it is absolutely necessary that you do your homework. Make certain whatever franchise you choose, fits your lifestyle and that you can find adequate and responsible help to aid you in running the business.

Commitment is another big consideration. The average contract for a franchise can be as short as 10 years, but usually require a commitment of 15 to 20 years. These contracts are extremely hard to get out of and should you be able to, there are large breach of contract fees to be paid also. Researching and finding the right franchise is important, but realizing the commitment you have to make is even more important.

In many situations it is wise to hire a franchise broker. What does a franchise broker do? Much the same as a real estate broker, but they deal in all the paper work required to put the deal together instead of selling you a house.

A franchise broker will help by supplying the needed documents; help in setting up contracts, help with the communication between parties and will provide assistance throughout the whole franchise procedure.

There are also franchise consultants. These people will help you find a franchise best suited for your individual needs, help you understand all the legal ramifications involved in the documents presented and help you understand all the demands that need to be met.

The advantage of paying for this advice is that the consultant can reduce the personal time you may have to spend on researching the best franchise for you and get you into business faster.

The important thing to consider whether you hire a franchise broker or consultant is that they are advising you as an outsider and you need to take into consideration your own needs and requirements and make your own decisions.

A Company offering franchises should also provide you with a list of current and previous franchises. This list is called the Uniform Franchise Circular Offering, it lists the names and telephone numbers of people who own franchises. It is to your benefit to start calling them and asking questions, some will speak to you and answer questions and some will not, but you can gain a great insight into the franchise business just by talking to owners.

Some of the questions you should ask are:

  • How long have you been in business?
  • Is your business growing as planned?
  • Did the franchiser provide adequate training and was it helpful?
  • Were there any hidden expenses?
  • Did they franchiser respond quickly to your needs and questions?
  • Were there any conflicts involved and were they resolved easily?
  • Tell me about a regular business day.
  • Would you become involved in this business again?
  • What have some of your biggest problems been?

    These questions and as many more as you can think of will help you get a better idea if the franchise is one that you would be able to make a success of.

    As in any business there are pros and cons and so I thought I would list a few you should consider when thinking of buying a franchise,

    CONS

  • You have to follow the rules and regulations set by the franchise. You will be limited to trying out your own ideas and ways to make the business grow.
  • You have to pay the fees to use the name and trademarked images for the products or services.
  • You have to pay your royalty fees out of your earnings.
  • You have to follow the guidelines and answer to the Parent Company just like you would to your current boss.
  • You are locked into a location, product, service for a fixed period of time which can be anywhere from 10, 15 to 20 years.
  • You have to agree not to open another franchise that is in competition with the one you own and if you sell, you are not allowed to open any competitor for a certain period of time.

    Now that you know the downside let’s look at the bright side and see what the pros are.

    PROS

  • There is a great reduction in risk by owning a franchise. It is an established business with a name.
  • It is much easier to get a franchise up and running than a new business idea.
  • Making a profit is easier as you are operating under an established umbrella.
  • Your operating materials are cheaper as you are buying from a resource that buys in bulk at a much lower price.
  • It is easier to get financing as you are operating with a known product/service.
  • You are trained by the Parent Company and learn the operating procedures.
  • Due to the Parent Company’s name and product/service you have instant recognition.

    Owning and operating a franchise business is a great way to start a business of your own. However, it is not a quick get rich scheme, most franchisees work extremely hard to get their businesses up and running and expect it to take several years before they turn a nice profit.

    If you are willing to work hard, follow the rules set by the parent company, do your research before you even begin, you can be your own boss, have your own place in the world and become a successful business owner. It is just a matter of time.

  • Author's Bio: 

    Audrey has been involved in the world of business for many years having worked as a radio station manager, promoted women's tennis, been active in the real estate business and was CFO of a small university. Currently she is involved in two websites www.cats-and-dogs-on-the-web.com and www.healthyrenagade.com and is the author of a new book So! You Want to Get a Cat, a must have for a new cat owner and people who have cats for a long time.