Franchising: An Overview Lloyd Shears When we buy a franchise we have in fact purchased a "license to use". This will be the rights to use the name, product, business methods, and ongoing support from a franchisor. What we in turn do with this, will in a very great way affect our success or lack thereof. Franchises come in many price ranges and business types. We will all be familiar with the major fast food outlets (often costing millions of dollars per franchise) and the big name automotive franchises. Keep in mind however, that if it is on every corner, you will have tremendous competition and limited room for growth. Less known by most of us is the service industry as a part of franchising. These service businesses are generally less expensive to get into, and at least as profitable as any other business category. For the purposes of this article, let me break the service business into two categories - business to business, and personal business franchises. Business to business franchises are often referred to as "white collar" franchises, due to the fact that they are usually purchased by outplaced middle to upper management people, who prefer to dress as they did for the office, and prefer to work with senior management of a company, as they did in corporate life. Downsizing, outplace, right sizing - call it what you wish - has given rise to a great deal of outsourcing by corporations. With this trend in our economy, there is an abundance of candidates for these "white collar" franchises and a ready market for their services. Personal service franchises are businesses where we provide services to people in their home. With very few homes having a full-time homemaker, many of the functions previously overseen by the spouse at home are being performed by franchise companies. Space does not allow me to go into long involved details about specific franchise companies, their costs and criteria. However, if you are thinking about franchise ownership, ask the questions, "Am I right for franchising? Do I have what it takes to be self employed?" Most of us at some point have talked about owning our own business … most of us will never achieve the goal. Why? Money and courage! To enter into business, we need both. If we have no money, it's simple - we won't be going into business. If we have money, but lack courage, if won't happen either! Money and courage are frequently inversely proportional to each other. I have yet to meet anyone with no money that did not have incredible courage. I rarely meet anyone with money who is not concerned with losing it. As the money comes in, the courage goes out. Not all franchise systems operate the same way, or with the same degree of success. There are big franchisors and small franchisors. It is reasonable to assume that a company, in business for 20 years with 350 franchisees, will be a far safer investment than a company in business since July with two franchisees. The new company has a sharp learning curve ahead; the large company has already learned to operate a successful franchise. Think of a new franchise company much as a child beginning to walk. With all the enthusiasm in the world the toddler takes their first steps. They stumble and fall, get bruised, but with time and growth those steps become ever more steady. So it is with a new franchisor. They set out to build a franchise empire. With all the enthusiasm of the child taking their first steps they go into business. And, just like the child, they stumble and fall - lots. In fact, so much so that most simply give up. The ones who do go on usually get stronger with time. This is why I encourage my clients to buy from large developed companies. Will a large, well developed company cost more than a start-up? Perhaps. However, the safety factor is certainly worth any extra dollars we may pay. Exploring different types of franchises could also prove interesting. The "service industry" is really just at the beginning stages of its popularity and market penetration. In that franchise area are many fine companies with investments of $20,000 to $50,000 and potential incomes to rival any other type of franchise. Before you decide to buy a business, do your research. Plan on it taking 20-30 hours of research over a 4-6 week period to know if a business is right for you or not.