INVESTING IN A FRANCHISED BUSINESS

Franchised businesses account for approximately one-third of all retail sales in the United States today, and this number is expected to grow to over fifty percent within the next twenty years. For many entrepreneurs, franchising is an attractive option because it allows a person to be his or her own boss in many respects while providing easy access to a proven business system with an established reputation. In addition, while many new businesses fail within the first few years of operation, franchised businesses have a much lower failure rate than independent start-up companies.

Franchising is not for everyone, however. Anyone considering an investment in a franchise opportunity should be prepared to devote considerable time, money, and effort to the process of researching various franchisors and comparing what each franchisor has to offer. There are consultants who specialize in helping you decide whether franchising is right for you and, if so, which franchise systems might be a good fit. Experienced legal and accounting professionals can be invaluable in helping a prospective franchisee fully understand his rights and obligations under a franchise agreement.

Investing in a franchised business will be perhaps the most significant financial decision in one's business career. Before making any final decisions, you should consider the following:

Franchising does not guarantee success or eliminate risk from a business operation.

You should expect to work extremely hard.

You must carefully budget for the substantial cash investment required for any start-up business.

You should not expect to get rich quickly.

You should investigate and research a number of franchisors before settling on a particular franchise.

Selecting a franchise involves more than determining which franchise charges the lowest fees or can claim the highest number of franchisees. A prospective franchisee should research and review industry articles and reviews contrasting franchisors in a chosen industry. Entrepreneur Magazine publishes an annual review of the top 500 franchises.

Perhaps the most important source of information about a franchise is the company's Uniform Franchise Offering Circular, the disclosure document required under federal and state franchise law that describes the key aspects of the franchise being offered for sale. Franchisors are required to provide this document to prospective franchisees

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