small business and entrepreneurship

Despite my initial misgivings about a franchising book written by the late founder of Wendy's, I have come to like the book a lot, because it gives you exactly the information you need to (1) consider whether franchising is right for you, and (2) get started becoming a franchisee.

The book starts with a general discussion of what franchising is and what the different types and varieties are, then proceeds to discuss the most important topic of the entire book (and your decision-making process): is becoming a franchisee right for you. An entire chapter is devoted to this topic and it's an open and honest discussion with a focus on what *you* want out of franchising. After you decide yes, it's right for you, it's time to get your hands dirty, and the book gives you a lot of information on every aspect of establishing a franchise and running it. Luckily, the authors do not promote Wendy's blatantly, although there's little information on their hamburger franchising competitors.

I first read a library copy of this book but it was good enough for me so I bought my own copy. I'm considering joining the franchising army, even though the compenstation doesn't seem attractive esp. in the first few years. Maybe in 5 years I'll come back to this page and report my experience. :)

This book was published in 2000 but the information (except statistics cited) is quite up-to-date.

A thorough overview of the process of evaluating, buying, running, and selling a franchise. Definitely read through this book (even if only in parts) before you start to invest yourself (time and money) into a franchise. It is a frank, and straightforward book about a complicated subject.

Some clues from the book:

1) As a franchisee, you buy "the right to use the franchisor's expertise, brand name, experience, methods, and support." (pg. 14).

2) Although you get a proven system, the business is yours.
It is work and it is not for everyone. Successful franchisees must be very good operators who stick to the rules.

3) Franchisors vary. Since you will be paying a royalty going forward, make sure you do the research and know what you are getting for your money. A contract can be a life preserver and a trap.

4) The evaluation, preparation, funding, and negotiation for the franchise is paramount. This book gives detailed lists, and questions to ask before you sign on that contract.

5) Top two reasons franchises fail: 1) not enough money going into the investment 2) absentee owners

6) Factors in assessing your location: population density, neighboring stores (cross promotion), anchor tenants, traffic patterns, speed of traffic, seasonal factors, day / night, competition, security, access to employees, size of property, zoning, landscaping, parking, landlord reputation, visibility, signs, environmental concerns, title, buy vs. lease, hidden costs.

7) Royalties vary according to franchisors. Wendy's is 4%

8) In the end, franchising is a relationship business with franchisor, customers, other franchisees, suppliers, attorneys, bankers, and family.

9) When selling the franchise to others, the franchisor often has the "right of first refusal" which means they can purchase it on the same terms and conditions as the offer you received from a prospective buyer. Check this clause prior to signing.

10) Use the International Franchise Association's webpage:
www.franchise.org.