Franchisee

Startup Costs: $100,000 +
Part Time: Can be operated part-time.
Franchises Available? No
Online Operation? No

Franchising offers a fantastic opportunity for go-getters who are eager to jump into business ownership right away. With a wide range of industries to choose from, franchising guarantees a proven roadmap to success, extensive corporate support, and instant brand recognition. So, if you're ready to take charge as the boss but don't have the time to start a business from scratch, this solid option provides thousands of choices that perfectly match your skills, passions, and budget.

There are over 4,000 franchisors in the U.S. today, and that number is growing by several hundred every year. Franchisors can be found in virtually every field of business, including franchise restaurants and franchise retail stores, franchise sales forces, and franchise service businesses. There are even franchise medical services. So, how do you develop your short list of a few franchises worthy of closer investigation?

As franchise expert Mark Siebert writes in The Franchisee Handbook, start by assembling a long list of all likely contenders. A good place to start is Entrepreneur's Franchise Hub, which offers great resources to research, finance, and run a successful franchise.

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Narrowing Your Search

Your first round of research must include an honest discussion with yourself about exactly what kind of business you're buying. For many franchisees, that "what" is not so much a thing as a feeling. If you ask an experienced franchise salesperson what sells franchises, they will tell you it's emotion—particularly for first-time business owners.

Popeyes is said to have sold a franchise to a doctor who had been eating their chicken for years. He had recently moved and loved Popeyes' food so much that he had to have a restaurant in his new hometown—even if he had to buy it himself. But when you buy a franchise, you are not buying the chicken, the fancy new vending machine, the bagel oven, or the virtual reality game. You are investing in a business system. You are investing in the support of the franchisor's management team. You are investing in the franchisor's track record and history of success. You are investing in their marketing system. You are investing in the future of their market. And you are investing in yourself.

Yes, you want to love what you are doing. But loving what you do is not the same as loving the product. Your focus must be on what you are buying (the business) and not on what your customer is buying (the chicken).

Research the Franchisor

There are thousands of franchise options prospective franchisees can choose from, spanning from ones with low startup fees to those in the millions. A good place to begin your search is Entrepreneur's annual Franchise 500 list, which ranks the best brands based on industry, record of success and corporate support.

Find Industry Associations

The International Franchise Association (IFA) is an excellent resource. Their website contains a wealth of franchising information. In addition to allowing you to search select franchisors, it provides information on industry suppliers in areas such as finance, insurance, veterans' programs, minority programs, and the franchise buying process. While the IFA focuses more on franchisors than prospective franchisees, it is a strong industry advocate and an organization you may eventually want to join.

Likewise, the U.S. SBA is a tremendous resource for aspiring business owners. On its website, you will find much information about SBA-guaranteed business loans and learn where to find an SBA lender in your local market. The SBA also offers access to business counselors who will assist you at no charge through programs such as SCORE, the Women's Business Center, the Veterans Business Outreach Center, and others.

Research a Franchise's Reputation

Once you have narrowed the field to perhaps a dozen franchisors, one crucial screen you need to employ before making your shortlist is to understand the company's reputation in the marketplace. Spend some time searching the internet for general information on the remaining names on your list.

In doing so, do not just search for the companies by name. Search for the company name along with risk-related search terms like "default rate," "franchise failure," or "litigation." While much of this information will be included in the franchisor's FDD, these searches might lead you to details not found in the FDD.

Attend Trade and Industry Shows

Another great place to get information on franchises you might want to consider is at franchise trade shows and industry shows if you are looking in a specific field. Franchise shows, in particular, will allow you to speak with several hundred franchisors from a variety of industries in just a couple of days.

These shows have other advantages as well. Generally speaking, they offer seminars on all aspects of franchising—giving you a chance to learn before you buy. These seminars feature topics like industry trends, understanding contract provisions, veterans' franchise programs, financing, and overall success as a franchisee and are often worth attending. The shows also have vendor exhibitors who might help you as you move forward with your franchise investment in areas such as finance, real estate, insurance, and franchise law.

Remember that these shows may not provide a representative sample of the franchise marketplace. The exhibitors tend to skew slightly toward younger franchises and ones with lower investment levels.