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How to Find and Analyze the Right Franchise Opportunity

By Frank Goley

A Franchise System can be a very effective way to open and operate a small business, especially for those without a lot of experience in operating and owning their own business. There are many advantages in using a Franchise System, such as, turn-key operations, marketing and business planning; large corporate support; lower learning curve; established accounting, cost control and management systems; brand identification; training programs; national and regional advertising; customer service programs; market trend responsiveness; supplier and vendor discounts; among others.

However successful Franchise Systems are expensive. The fees⁄costs consist of a franchise fee, royalty fees and start-up costs. So it is very important to have a solid due diligence process in place to determine if a particular Franchise Opportunity is right for you, and whether the costs to establish and run the franchise match the effectiveness of the Franchiser's Package Offering.

Types of Franchising Systems

• Product⁄Service and Trademark Franchising

This is an arrangement which the franchisee is granted the right to sell a well recognized brand. Most franchisees concentrate on one franchiser's product⁄service line, identifying their business with the franchise. Examples include: Automobile Dealerships, Gas Stations, Soft Drink Bottlers, etc. The franchiser exercises little control over the franchisee's business, with the product⁄service integrity being the biggest concern of the franchiser.

• Structure and Responsibilities

• Franchiser provides a Standardized Product

• Franchisee Pays Franchise Fees and Responsibilities include:

• Marketing
• Training
• Control System
• Operating System
• Accounting System
• Building, Equipment, Signage

• Business Format Franchising

Franchisee is granted the right to use a turn-key marketing system, with substantial assistance and guidance from the franchiser. Types of franchises include Restaurants, Retail, Hotels, Business Services; Automotive Products, Parts and Services; Convenience Stores; Entertainment Centers and so on.

• Structure and Responsibilities

• Franchiser provides:

• Building Plans
• Equipment & Signage
• Marketing System
• Business Plan
• Operating System
• Training Personnel
• Accounting System
• Control Systems