Is Franchising for You?
By Patricia Cobe and Ellen Parlapiano
Authors of Mompreneurs®: A Step-By-Step Guide to Work-at-Home Success
and Mompreneurs® Online: Using the Internet to Build Work@Home Success
Home business franchises are growing in number and scope. You can run everything from computer tutoring to a house cleaning franchise from a home office—but is it worth the buy-in price of up to $20,000 and more?
For some work-from-home moms, a franchise is a good way to get a home business off the ground—provided you have the start-up cash and a nest egg to get by for three to six months. But you also must have a certain personality to become a successful franchisee. And as enticing as a franchise opportunity might seem, there are some drawbacks. To help you make a smart decision, here’s a rundown of the pros and cons of franchising, plus a checklist for potential franchisees.
PROS:
- On-the-job training. The parent company usually provides a blueprint to getting started in that particular business.
- Brand-name recognition. A good percentage of your marketing is taken care of when you hook up with a reputable company that is know in its field.
- Technical support and advice. Perks like direct mail advertising, website links, and web design often come along with the contract.
CONS:
- Royalties and other expenses come out of the franchisee’s pocket. This may include monthly advertising fees as well as royalties on gross sales to the parent company.
- Some francisors prey on mothers. They feel that moms are so eager to find a lucrative work-from-home opportunity, they will be more vulnerable and won’t research as thoroughly.
- Determine your compatibility with franchising. If you have a very independent personality and want to bring a lot of your own ideas to a franchise operation, starting your own home business might be a better move.
CHECKLIST FOR POTENTIAL FRANCHISEES
- Do your homework and thoroughly research the franchise company you are considering before you make any commitments.
- Obtain a “uniform franchise offering circular” from the franchisor you are interested in before you sign anything.
- Contact a sizeable number of current and former franchisees (you can get names from the uniform franchise circular). Ask them about their experiences with the parent company, gross and net sales, training and support, potential protection from the franchisor, competition in your area, and how the business affects work/family balance. Even if a franchisor promises that the business is part-time, in reality, it often becomes a full-time job.
- Before you sign a franchise agreement, go over it carefully, preferably with an attorney who knows something about franchising.
- Get in touch with the Better Business Bureau or your state attorney general’s office to see if any complaints have been lodged against the franchisor.
- Check out The American Franchisee Association http://www.franchisee.org for more general insight and background into franchising.
- Consult with a franchise expert to narrow down your choices. For a free consultation, go to http://www.letsfranchise.com/?code=ELL-
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