Once you've decided to launch a self directed career, you still have many options to consider when setting a course of action. At one extreme, you could be wildly independent, with full responsibility for creating and operating every aspect of your own business. Conversely, you could sign a contract with one employer that would create a working life only slightly different from being a full time employee.
Somewhere in between is franchising a unique form of self employment within a structure established by others. You're in charge, yet you're also subject to a corporate image and operational methods that dictate many of your business activities (and strongly influence others). Despite the vast array of opportunities that fall under the general category of franchising, this form of business ownership isn't for everyone.
Yet more and more managers, executives and professionals are choosing this route. The Small Business Administration says there currently are more than 500,000 franchised units in the United States with total sales of more than $700 billion, or about 34 percent of this country's total retail sales. By 2000, franchised sales are expected to claim 38 percent of the retail market, the SBA reports.
Most of the growth is occurring in what's called business format franchising, in which you create the product or service within an established format, such as a fast food outlet. This kind of franchising accounts for about three fourths of the field. The remaining 25 percent is in product trade name franchising, in which you simply obtain the right to distribute and sell a brand name product within a particular market. Gas stations and car dealerships are good examples of that.
The giants of business format franchising those with more than 500 outlets dominate the franchising market, garnering significantly more than half of all franchise sales. But the greatest growth area in franchising is with small companies those with fewer than 10 units.
What'll it be?
You can spend from less than $5000 to more than $1 million in an initial investment in a franchise. Then, you can expect to pay somewhere between 4 percent and 8 percent of your revenues as an ongoing royalty. In addition, there are likely to be cooperative advertising costs of perhaps 2 percent to 3 percent of sales. In return, you'll receive:
- Name brand recognition and good will
- Advice and training,
- A tried and true operational methodology that reflects lessons learned by previous franchisees,
- Bulk rate discounts on supplies,
- The benefits of cooperative advertising, and
- Moral support, if not invaluable assistance, as you move forward.
Is Franchising for You?
Joseph Mancuso, founder of the Center for Entrepreneurial Management in New York, has a few questions for you to answer to help assess whether you're the franchising type. Circle the single answer that best fits your personality:
1. I have generally been regarded as:
- one who loves to plan vacations
- always willing to work hard
- one who seeks benefits and rewards for my work
- am very conservative
- am very liberal
- have always been able to put money aside
- have never been well off
- one of my strong talents
- something I don't like
- often a must
- acceptable if not constantly required
- can cause physical illness
- is something I try to avoid
- is a definite problem in business today
- seldom causes me any discomfort
- the ability to sell things
- a good grasp of what makes people tick
- physical strength
- emotional warmth
- have luck on your side
- be happy in your work
- be willing to take risks
- know the right people
- am dissatisfied with my present position
- have had a variety of life experiences
- have strong business and sales skills
- have not had much business experience
- an appetite to learn more about what you do
- a happy and stable personality
- physical stamina
- extensive business experience
- an intelligent person
- a highly verbal person
- a hard driving person
- a person who can relate to other people
