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Franchising may be edge for success

By Times staff writer

© St. Petersburg Times, published February 12, 2001

Editor's Note: This column is one of a series of monthly columns that provides information supplied by the Citrus County SCORE Chapter 646, which offers free, confidential counseling services to new and existing businesses in the county. The counseling covers a range of business-related topics. For an appointment, call 621-0775.

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Franchising is often described as a business or industry.

Actually, franchising is simply a method of doing business. You can become a business owner under a franchise agreement.

Franchising has been adopted and used by a wide variety of businesses as a means of efficient expansion. Under a franchise system, an individually owned business is operated as though it were part of a large company. The parent company acts as the umbrella organization. This company authorizes the franchise outlets to use its trademark and benefit from the image and support of a larger organization.

Generally, the franchiser (umbrella organization) will dictate standard design for business facilities, specify the use of certain equipment, products or services.

The franchiser will provide instruction on operating the business in accordance with the standards established for all franchise operations. Most people think of a franchise as being a product or a service, such as fast food, restaurant or hotel business. Franchises also are available in the wholesale and manufacturing industries.

Franchising offers many advantages to an entrepreneur. As a small business person you can "buy into" a well-established venture with a proven formula for success. This offers you high probability for success when the franchise formula is carefully followed.

The franchiser should provide solid advice (often mandated), site selections, management advertising, accounting, product research and development to aid the overall success of the franchise organization. Greater efficiency and profitability result from uniform co-ordination.

Is the concept of a franchise right for you? You must be willing to accept the program, vision and procedures set forth by the Franchiser. Any ideas you may have for customizing the proven formula must typically be approved.

In a sense, you forgo some of the independence you have sought as an entrepreneur. Naturally the trade-off in autonomy for the franchiser support system must be weighed against the increased chances for success.

Typically, as in any small business, long hours and hard work are required. With many franchises it is likely to be several years before you can show a profit above your salary. There is no guarantee, however, that you will earn a profit any sooner than if you started your own small business.

When considering franchising, you must carefully evaluate whether a particular franchise is for you. The following factors should be considered when evaluating franchise opportunities:

How much money can you invest? Before investing in a franchise, be certain you can afford any fees charged by the franchiser. The initial investment could vary from a few thousand to several hundred thousand dollars.

Are you qualified with the background necessary to make the business a success? Do you have experience in whatever field you are considering to venture into?

Successful franchisers look for assurances that their good names and reputations will be in good hands with you as a franchisee.

What are the terms of the franchise agreement? It is in your best interest to engage a business counselor, lawyer and an accountant to examine the franchise agreement carefully.

You most fully evaluate the agreement before any commitment is considered to the venture.

If you would like to arrange a meeting with a SCORE Business Counselor to further discuss franchise ownership or any other business venture, contact SCORE at 621-0775.

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