The Tribune Democrat, Johnstown, PA

Business

April 6, 2013

SCORE | Getting a feel for franchising

— Are you eager to start a small business but worry that a lack of resources and/or experience will doom your entrepreneurial dreams?

Then consider franchising, an approach that thousands of people from all walks of life have transformed into highly successful enterprises.

A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name or advertising symbol and an individual or group wishing to use that identification in a business. Generally, a franchisee sells goods or services that are either supplied by the franchiser or meet the franchiser’s quality standards.

According to the International Franchising Association, the U.S. has more than 900,000 franchising businesses in more than 90 categories. Franchised businesses generate $2.31 billion in economic output each year.

What sets franchises apart from other types of small businesses is that the franchiser does much of the “upfront” work, providing franchisees with services such as site selection, training, product supply, marketing plans, advertising and financing.

Best of all, franchisers don’t simply leave their franchisees to fend for themselves when times get tough.

“The beauty of a franchise is that you get the experience and support of people who have been through tough times,” said Jania Bailey, president and chief operating officer of

FranNet, the nation’s leading franchise consulting organization. “The franchiser is there to help with suggestions and systems that have worked in prior economic downturns.”

Don’t look at franchising as a shortcut to entrepreneurship, however. Research and due diligence are musts for any prospective franchise owner.

That includes fully understanding the franchiser’s disclosure document, which discloses information about the franchise organization, and the franchise agreement – the actual contract between franchiser and franchisee. Watch for specific requirements such as sales quotas, mandated sources for equipment, supplies and inventory, and conditions for terminating the agreement.

It’s also helpful to interview some of the company’s current and past franchise owners to gauge the level of support they receive.

Bailey also advises prospective franchisees to plan for the long term, and partner with franchise organizations that have the same perspective.

“A franchisee needs to have a well thought-out personal business plan with long- and short-term goals, then look for a franchise that matches up with them,” she said. “Also, they should pick a franchise that has a good track record of growth, and increased earnings at the franchisee level.”

Franchisees have something else in common with other types of small business owners: They can call on SCORE for help in gathering and evaluating information, and making informed decisions. Many of SCORE’s more 13,000 volunteers are themselves successful franchise owners who are ready to share their insights at no charge.

SCORE is a nonprofit organization formed to help small businesses. To learn more about the Cambria-Somerset chapter of SCORE, call 536-5107, visit www.alleghanies.scorechapter.org or e-mail score575@atlanticbb.net.

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