Franchising is a very popular method of doing business. Franchisees generated $803.2
billion in the sale of retail goods and services in 1992. According to an industry
newspaper Franchise Times 76 percent of franchisees are satisfied and 73 percent
would recommend franchising to others. As a small business venture, franchising offers the
entrepreneur an opportunity to follow a formula for what has demonstrated itself to be a
tried and true business.
While no business is without risk, franchising provides entrepreneurs with a business
option that offers trademark, guidelines and a business format. There are advantages to
the foundation provided in a franchise business. However, the owner does relinquish some
autonomy by agreeing to follow guidelines established in the franchise
agreement—which is a legally binding document.
The most common type of franchising is business format franchising, which in effect
provides a blueprint for the building, promotion, operation and products and services of
the business. The franchise investment may range be tens of thousands to hundreds of
thousands of dollars. An up-front fee and a continuing royalty, based on percent of sales,
are usually required as part of a franchise agreement. Product and tradename franchises
are available, such as auto dealerships.
Before you decide to make your mark as an entrepreneur, learn more about franchising.
Sources of information on franchising are abundant. The sources described below can help
you make an informed decision about franchising as your avenue toward entrepreneurship. If
you are on the Internet, you can go direct to many information sources and simply download
and print information of interest to you. Take a look at http://www.smallbusiness.apple.com
and visit the SCORE Hot Page where you can find the article "A Look At Franchise
Business."
The Federal Trade Commission is a source of information, forms and regulations
that affect franchising. Call the Federal Trade Commission, Public Reference Branch (202)
326-2222, stay on the line for an information specialist—do not enter the information
menu system for this item—request a free copy of the pamphlet "A Consumer Guide
To Buying A Franchise." Use the information menu system for consumer credit
information, copies of consumer education brochures and information about franchising.
Franchising information available includes: access to federal disclosure requirements for
franchises, a copy of a federal disclosure for a specific franchise, information on
complaints on file, as well as information about filing a complaint. You can also access
the commission’s web site at http://www.ftc.gov.
The International Franchise Association is a trade association for both franchisors
and franchisees. They have franchise resource books that are sold to the public for fees
ranging from $15-$95 dollars. The association offers franchisees’ seminars,
networking opportunities and "how to" information. You can access franchise
information, as well as information about the association itself at http://www.entremkt.com/ifa or call (202)
628-8000.
The American Association of Franchisees & Dealers is another trade
organization available to you. Formed in 1992, the organization has Trademark Chapters,
which represent all of the franchised systems in which they have significant membership.
The organization offers members publications, discounts and a professional referral
network. You can access franchise information and association information at
http://www.aafd.org.
(Once you have gathered information about franchising, you need to evaluate the
information and form opinions. For a free and confidential source for information review,
discussion and business counseling, contact the SCORE Association (Service Corps of
Retired Executives). SCORE has 12,400 volunteer, business counselors ready to provide
assistance to entrepreneurs through counseling and mentoring. SCORE has assisted more than
3.5 million entrepreneurs. For a referral to the SCORE chapter nearest you, call 1 (800)
634-0245.
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