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How does a franchise work?Franchises have been around for a long time. What is a franchise? How does a franchise work? Think of a franchise as a chain store, where individuals (you!) own the individual stores, instead of a company owning all the stores. Let's say you have a great idea for a business - selling chocolate football helmets to local high schools. You come up with a logo, a store, merchandising displays, inventory, everything is perfect, and you are selling a ton of helmets. How do you grow your business? You are busy all day, you are already marketing and selling to the 8 high school near you, so you open a second shop about 25 miles away, and start selling to those high schools. You can quickly see that all your time and resources will be quickly tapped out after opening 2 or 3 stores. So how do you expand your business and reach every city across the country? You turn it into a franchise.
Buying a franchiseMany people see investing in a franchise as a way to own their own business and be their own boss. And you don't have to invent anything or take on major risks. You get to take an established, functioning, proven business and start your own local version of it. Normally, franchises have certain financial requirements you must meet, like a certain amount of liquid net worth (sometimes $20,000, sometimes $500,000 - depends on the nature and scale of the business), a certain up front cash investment requirement (sometimes $5000, sometimes $300,000), etc. The franchisor wants to make sure you, the franchisee, have the resources needed to get the business off the ground, and the commitment to make it successful. What do you get when you buy a franchise? There is normally a lot of support provided to help you succeed. First, you get access to "the brand" - the company and product names that are hopefully already established and well known, making them easier to sell (would you rather try to sell Coke or Joe's Soda?). Then there is franchise training in the form of classes, books, and one-on-one help. Training will cover things like retail management, customer service, personnel hiring and training, merchandising and display, marketing and advertising, etc. Their goal will be to make your business on par with their existing, successful businesses. And they have a stake in your success as well - when you make more money, they make more money.List of top franchisesThere are many different types of franchises available. You can start at a site like FranchiseForSale.com to get some ideas that appeal to you. Many different industries have franchise opportunities - autos, jewelry, pet care, travel, tools, health, cleaning, business services, restaurants, retail, security, to name a few. For example in cleaning services, you can check out franchises from ServiceMaster Clean, the Maids Home Services, Office Pride, 1-800-GOT-JUNK, Dalworth Carpet Cleaning, Maid Brigade, Jan-Pro, Dr. Glass, and more. You can research any of these at their site and request additional information. For example, 1-800-GOT-JUNK has more than 250 franchise partners. They require $70,000 in capital and a net worth of $150K. "Our brand's success is based on the quality of the people we invite into the system. Our best Franchise Partners are aggressive, strong leaders, results-oriented and excited about long-term growth. We have a strong work hard / play hard culture." They look for people who can manage a multiple truck business, have a strong sales background, good people skills, and knowledge of the market. They provide business coaching and field support, a centralized call center to dispatch trucks to customers, nationa brand and website and advertising. They even offer to refund your territory fee if you don't reach $100K in revenue in your first year. And that's just one franchise to consider. How about MAACO Collision Repair? 1-800-Flowers? AAMCO, Alphagraphics, Arbys, Blimpies, Coffee Perks, DVD Now, Fantastic Sams, Glass Doctor, Dollar Store, Hottie Body Tan, Kiddie Academy, Lawn Doctor, Merry Maids, TCBY, Mrs. Fields, Party America -- all these are available franchises. What are the best franchise opportunities? It depends on the individual - you need to consider what kind of work you want to do, whether you want a retail location or home service or business service kind of opertation, how much money you have to invest, whether or not you want to manage a lot of employees or just yourself - all these things are considerations.Entrepreneur.com has a nice section devoted to franchise businesses - how to buy a franchise, franchise 500, pros and cons of franchise ownership, fastest growing franchises, etc. They have good advice on preparing cash flow projections before jumping into a franchise, what the associated costs are (inventory, leases, equipment, advertising fees), and more. Their list of the best franchises for 2006 include Subway, Quiznos, Curves, UPS Store (used to be Mailboxes Etc.), Dunkin Donuts, Jani-King, Jackson Hewitt Tax Services, RE/MAX, 7-Eleven, and Liberty Tax Services. We highly recommend you spend some time on their site reading up and getting a decent background on the topic.
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