Thanks to Franchise Direct, franchising is going green.

As businesses continue to embrace environmentally-friendly practices, the franchising industry has witnessed the recent growth in green franchises. As such, Franchise Direct, the world’s leading portal for franchise opportunities, is proud to announce the launch its own line of green businesses. Eco-conscious business practice represents the way forward and Franchise Direct is looking to provide the entrepreneurial world with a green injection.

The reasons for a green conversion are bountiful. The world can no longer sit idly by and expect the earth’s resources to replenish themselves. And while necessity drives the engine of environmentally-friendly commerce, profit is still part of the equation. The truth is, the time is coming is when environmentally-friendly practice will be the exception, not the rule, for small business owners. Innovative entrepreneurs are developing their green businesses at the moment and Franchise Direct has decided to provide them with platform for global success.

With Franchise Direct’s green franchises, entrepreneurs will be provided with a vast range of business opportunities linked together by a common commitment towards saving energy and utilising green energy methods. As the green marketplace continues to expand, Franchise Direct will be the central resource for this franchising sector, fostering the gradual evolution of the industry.

Take, for example, a company like Filtafry. In 1996, Filtagroup launched the Filtafry brand, after pioneering a cleaner oil filtration technique. Filtafry gained attention from restaurant owners immediately because it provided a more economical approach to oil filtration. Its environmental impact, however worthy, was something of a secondary concern. But Filtrfry sensed that a market was developing and chose to continue investing in its line of environmentally-sustainable products. Thirteen years later and Filtafry is at the forefront of its industry and living proof that green businesses can also be profitable ones.

The Franchise Filtafry is just one of the exciting environmentally-conscious companies that Franchise Direct now provides access to. There are also green opportunities with pizza, home cleaning and indoor air cleaning businesses with Franchise Direct. And this is only the tip of the franchising iceberg. As the marketplace responds to the present environmental challenges, green franchises like Filtafry will become more and more essential to commercial activities. You can be guaranteed that Franchise Direct will be on hand to provide entrepreneurs with direct access to the most innovative green businesses.

As the success of a company like Filtafry illustrates, there’s no stopping a unique entrepreneurial idea. If you’re an investor look to ride the crest of the green wave to financial success or if you have a sustainable business concept that’s ready to thrive on a national level, let Franchise Direct act as your conduit to profitability and business growth.

Author Information

Diana Thurmann
Franchise Direct

If you are considering starting a new business, like many others in your situation have faced before you, you have probably weighed the options of starting an individual business from scratch or opting for a franchise situation.  Comparing the two can be a daunting and confusing process, as both have pros and cons that can greatly affect your business and your financial stability in the years to come.  Investing in just about anything in an economy like we are facing today can be a scary process.  Fully considering your options and making the best choice for you is the best insurance you can have for your investment.

What type of risk taker are you?
You need to start the decision making process by taking into account your comfort zone as well as your goals.  With a start up, you have a higher risk of investment, as nearly fifty percent of all start up businesses fail in the first five years.  You will also find you will work harder to meet your goals, at least initially.  Without an established brand to back you up, you have to push yourself infront of your target customer and draw them into your doors.  While hard work and bigger risk may scare some people off, for the adventurous entrepreneur the payoff can be big.  Consider any major franchise out there today.  Each of those mega corporations started out as someone’s local, home-grown business.  If your dream is to own an empire, an individual business may be the best option for your investment capitol.

If you prefer to invest in a manner that is lower risk, franchising may be the better option for you.  Franchising provides a great opportunity to open a business without the requirement of building a brand.  The brand recognition, consumer loyalty and track record is there for you to see.  Franchises often have entire teams devoted to helping their franchisees succeed- from choosing the right real estate to walking you through supply orders, a franchisor is committed to helping you avoid mistakes. Franchisees reap the benefits of corporate advertising, as few individual businesses can hire design and marketing teams to promote their concept the way a major established corporation can. The downside to franchising is that you must run your business within the guidelines of the parent company, so despite having your own business, there is still the “boss” entity many wish to avoid.  There is tremendous opportunity for profit, but your ability to expand in your market may be limited by territory boundaries.

There is no “best” or “one size fits all” answer to the question of franchise versus independent business. In the end, both can be lucrative, both have risks, and both have their limitations.  Talking with other experienced entrepreneurs that have struck it alone as well as successful franchisees is the best place to start.  In the end, it is a personal choice as to which is right for you.

As you think about opening your own restaurant the very first question you should ask yourself is “Do I have the experience and capital I need to start this venture?”  If the answer is yes, the next question is most likely “Do I open a franchise or start my own brand?”  While the idea of starting your own brand may seem appealing, it is important to consider one hard fact.  Over half of the businesses that start as new ideas fail in the first five years.  That’s not to say this country does not need and thrive on innovative ideas, but when it comes to your financial outlook you owe it to yourself to look at franchising with a proven brand.

The benefits to franchising can best be summarized with one statement.  There is less risk to the investor.  This isn’t to say that there are absolutely no risks involved in starting a franchise.  However, the chances of succeeding with a new business and generally the fastest way to see your bottom line in the black is to open a franchise rather than an independent business.

Considering that by and large, the majority of new businesses that do not survive that essential first five years in business are independent businesses, one has to question why franchises are a safer bet for your investment capitol.  There is no one magic answer, but rather several contributing factors that when pieced together complete a puzzle that is much more solid and therefore a safer investment all around.

Brand Recognition and Loyalty

Think about starting a brand new business from scratch. As an entrepreneur you have to figure out how to reach your target market, how to communicate to these potential customers what exactly it is that you offer, and entice them to spend their hard earned dollars at your establishment.

A franchise owner gets to skip the majority of those processes.  If the franchisor has been on the market for any real amount of time the general population is probably quite aware of what it offers and has a good impression of business.  It boils down to habit.  People are comfortable with what they know.  A perfect example in the restaurant industry would be opening a Wendy’s franchise.  If you are hungry and have a limited amount of time to eat, and you know that Wendy’s is fast food that you enjoy and can afford, you are more likely to eat at Wendy’s than to try the new burger joint that opened down the street.  While there are always some people that are more adventurous than others, the vast majority would save trying the new restaurant for when they have more time and money at their disposal.

Marketing
Brand recognition and brand loyalty come from another benefit of franchising- marketing.  Marketing is something that costs quite a bit of start up capitol for a new business, but for a franchisee is generally done on a much larger scale by the parent company.  Looking back to our Wendy’s example, the parent company obviously can afford much grander marketing plans than the average start up could ever dream of funding.  The money the parent company spends on advertising has a trickle down effect, benefiting both franchisor and franchisee considerably.

Planning

It is safe to assume that the reason why most independent start ups fail in the first five years is lack of a solid business plan.  With a franchise, these common mistakes have not only been made, but quite clearly overcome, for the parent company to grow to the point it is offering franchisees a part of the business.

While there may be extra costs involved in franchising, those costs are easily made up by the fact that the brand image and loyalty are firmly in place, large scale marketing is done by the parent company, and the majority of the business mistakes have been overcome before you hand over your first dollar.  In today’s economy, safe is the best bet you can make with your investment capitol.

To truly understand franchising, you cannot look at it like a business- but instead, a way of doing business. True, it is a way of owning your own business, but on the other hand, this unique niche offers a variety of proven ways to get your foot in the door to any number of industries. The truth is, franchising generates over one point five trillion dollars in sales a year, so, it’s not only a different way of doing business, but a profitable one.

A franchise is, by definition, a legal, commercial relationship between the person or company that owns a trademark, trade name, service mark or any sort of advertising symbols and the people or person who wishes to be able to use that identifying information for their business. This means following the franchisor’s business model, as well as going along with the way that they want things done, for the most part. The majority of franchises involve sales of some sort, the franchisee providing goods and services that either meet the franchisor’s standards or are actually provided by the franchisor themselves.

The franchisee/franchisor relationship is one that should be based on teamwork, essentially- there is a great deal of trust between both that must be there, and communication is key. This is a sort of mutually beneficial arrangement where many will say is actually in better benefit to the franchisor, but that is not so. For franchisees, it often means having a stronger, more solid backing and way of doing business, where they are able to turn a decent profit and even experience some growth. For franchisors, of course, they reap the benefits as well and on the whole, a well researched franchise investment should be good for both parties involved.

When you’re looking into franchise, there are generally two types. Business format franchising, which involves a bigger picture. This is usually involved, with the vast majority of franchises in this format being real estate, convenience stores, tax preparation services, lodging and fast food restaurants- though there are other businesses under the umbrella of Business format franchising. This form almost always involves not only a set way of doing things, but training, materials and often marketing programs. The simpler format is product and trade name franchising, which does usually only involve license of the use of trademark to the franchisee. Product distribution is usually fairly common.

Being able to choose which type is right for you is usually a non issue, however. The best way to find a franchise that suits your needs is to first consider what those needs are. Then, think through your long term goals and map out a loose plan for them. Once you’ve done that, consider what sorts of options you have in the way of financing, and then begin your research. From there, don’t discount a franchise simply because it is in an industry you’ve not considered. Many people find success in industries they have no experience with, as this is one of the big assets to franchising- the training is usually provided and with enough drive, you, too can be a success.

The Franchise Disclosure Document is an important aspect to a franchiser franchisee relationship. Franchisers are responsible for offering these to prospective franchisees, and as long as they are in writing- the format in which they are delivered does not really matter. You should recieve your FDD at least fourteen days before signing a franchise agreement, though many franchisers offer it much sooner so that you are able to fully look it over and ask questions about things you are unclear about.

The purpose of the twenty three page document is to give the prospective franchisee all of the information about the franchiser that they need in order to make a clear and informed decision. This is also a good document to share with your attorney before you sign, as an attorney familiar with franchise law can help you to not only better understand, but can help you to be sure everything that is supposed to be included is there.

There are currently fifteen states that have franchising laws requiring franchisers to give disclosure to all potential franchisees. These are called “offering circulars” and they are a very important aspect in informational exchange between the prospective franchisee and the franchiser. Of the fifteen, thirteen of these states view franchise sales much like the sales of securities- another investment. In those states, franchisers cannot offer or sell their franchise without first filing on public record and registering. There are two states that currently do not require filing, and you will want to make sure that you’re clear on which state laws apply to you and the potential franchise you are thinking about buying.

These laws were created to give prospective franchisees better legal rights- including the right to bring to court a lawsuit for violation of disclosure requirements and responsibilities. If you live in California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin, you have certain rights by law, and your state websites will offer more contact information on them. While not all states require filing of the FDD, all require that the franchise itself be registered as a business in that state.

Bear in mind- the disclosure documents are not the franchising agreement itself- the disclosure is just a way that the franchiser uses to keep the prospective franchisee informed as to many different aspects of their organization. While receiving and reviewing this information is vital, as is going over it with an attorney that understands franchise law, there is at this point still no obligation to the franchisee. This is also where you can begin your negotiations, and that is one of the many reasons that it is important that you are clear about each point in the disclosure, as it can better enable you to work with the franchiser to an outcome you can both be satisfied with. However, making sure that you understand all of the information that you have been given, and clarifying any that you don’t feel completely comfortable with is key before you get into the franchise agreement and before you sign.

A franchise agreement is the most important document that you will find in becoming a franchisee, without it- you aren’t quite there, yet. This is the first step in forging a very solid relationship with the franchiser, and it is legally binding to both parties. This will be what fleshes out the obligations, responsibilities and rights of both franchiser and franchisee. It is typically a great deal more fluid and adaptable than the Franchise Disclosure Document, as it does contain aspects that are geared to meet the needs of both the franchisee and the franchiser. It also differs quite a bit than typical business licensing- and this is something to note, if you are given a “license” as opposed to a “franchise agreement” it is probably best that you make sure that your lawyer looks it over as this is a common scam.

Often, there is a version of this, or a sample agreement that will come with the disclosure statement, but you will have the franchise agreement at least five days before you are due to sign. Making sure that you discuss the contract first with a franchise law attorney, and if you have any questions or concerns address them before you sign. If you have gone over the franchise agreement with your attorney and you both feel that there are certain provisions that need changed, or you have further concerns, it is always best to speak to the franchiser directly to make sure that you are getting exactly what you want out of your franchise agreement and are proceeding forward with confidence in your decision.

Franchise agreements have provisions and will go into great detail the responsibilities of the franchiser to you- but also, it will fully outline what your own responsibilities as a new franchisee will be and what sort of training, support or direction the franchiser will offer and provide. This also will usually explain any fees pertaining to that, and other aspects of the franchise, as well as what territories you may have and if they are exclusive to you.

Another thing you will find in your franchise agreement will be any renewal rights or responsibilities, how long the franchise agreement will be good for and any royalties or service fees you’ll have to pay. This will also go into tax concerns, transfer or sale of the franchise, advertising and marketing issues, termination, disputes and operating practices, as well as any attorney fees associated with the agreement. Often, there will be other parts of the agreement that will go into the details concerning upkeep, maintenance of property and an operations guide as well.

Generally speaking there is not a common form, there’s no standard or template way that the franchise agreement will be laid out, though- this is because most of the terms, methods of operation and conditions are different from franchise to franchise. Bear in mind, though your franchise agreement may only be for a set term- this is something you want to be long term, and you will likely renew, so be sure that you have everything in order before you sign.

When thinking about going into business, one of the first things an investor has to decide is whether to go into business completely independently, or whether to become a franchisee. Independent ownership allows the owner a greater degree of creative input and oversight of the business. Franchise ownership, however, offers a number of benefits that help to improve the new owner’s chances of successful business ownership.

Brand Loyalty

Brand recognition and loyalty is probably one of the most significant beneficial factors that favor franchise owners. When a new franchise opens, it does so with a certain level of recognition and acceptance. An independent owner would have to work very hard for a number of years to establish the same acceptance within a community that a franchise starts out with. People know franchise names, are aware of their products and services, and are often dedicated to using only those brands that they recognize and trust. This brand loyalty helps to ensure the initial and ongoing success of franchisees.

Marketing

This brand recognition and loyalty is only partially generated by positive customer experience at other franchises of the same brand. Though previous experience definitely does play a role, the biggest contributing factor to brand recognition is marketing. Most franchisors are able to market their brand on a scale that dwarfs anything possible in independent ownership.

Franchisors simply have more marketing funding and resources. By virtue of their size and financial resources, franchisors are able to conduct market research, create more effective ads and advertise across a broader spectrum. The saturation of a media with a brand name creates brand recognition and encourages an ever-growing customer base for franchise owners.

Multi-Level Support

Franchisees also have the benefit of several levels of support within their franchising organization. Most notably, franchisee have the immediate support of the franchisor during the start-up stage of their business. This helps to ensure that the owner has solid business experience and strategy guiding the selection of location, raising community awareness and all other aspects of starting the business. The franchisee most likely receives training from the franchisor, as well, which improves the franchisee’s chances of success.

Where franchisor support ends, the franchisee is able to draw upon the accumulated knowledge of his or her network of peers. This network includes all franchise owners who have been in business longer and have more experience. These peers can help guide the new franchise owner through almost any obstacle. Even if the franchisee is a new first-time business owner, he or she will have years of practical experience in the field to draw from.

Between the guidance of the franchisor and the peer network, there is very little that the new owner can encounter that has not already been worked through and solved beforehand. This helps to reduce the risk of making costly, and potentially disastrous mistakes. Of course, this support can only stave off failure if the new franchisee has the wherewithal to make use of it. Nevertheless, the support is there for the taking and provides a distinct advantage over independent ownership.

More than half of small businesses never last through the first five years of business. This is an incredible number, even more so when you stop to think that most of these businesses represent a huge investment of capital. For many, failure means walking away with nothing, having lost everything.

However, of that 50% that fail, it is worth noting that franchises have a much lower rate of failure than independent businesses. The reasons for this disparagement in the numbers are several, but it is undeniable that franchisor support plays a major role. The support offered to new franchisees give new franchises an edge in the market.

The Mutual Benefit of Support

. Effective franchisor support helps both the franchisee and the franchisor. For a franchising organization to do well, it must ensure the success and profitability of as many of its franchises as possible. Franchise success brings in revenue for the franchisor, and makes the franchise brand more attractive to future investors.

Means of Support

Franchisors offer direct support of their franchisees in a number of ways. The most visible means of support lies in the area of marketing. Franchisors run large scale marketing campaigns on behalf of their franchisees to maximize their ability to reach customers. Franchisors also often assist franchisees with developing local marketing strategies and tactics.

Many franchisors also offer a greater degree of support during the initial stages of franchise start-up. Many are very active in the critical aspects of start-up such as site selection. Again, this is because it is mutually beneficial to ensure that the new franchise starts out on the best footing.

A number of franchising organizations offer support in the form to training, and training assistance. Franchisors will train new franchisees in-depth regarding franchise management and even in general business tactics, to help them succeed. Most franchisors will also provide training material to assist in training staff members to meet brand standards.

Indirect Support

Not all franchise support comes directly from the franchisor, though the franchisor may act to facilitate and encourage it. Peer support also plays a major role in the success of new franchises. As a franchising organization become better established, the scope of peer support greatly increases.

A franchisee’s peer network consists of all other franchisees operating under the same franchising organization. Again, the older and more established the brand is, the greater the support. For a franchising organization that has been around for many years there are an increasing number of franchise owners who have been in the business for years and who know the ins-and-outs of running an individual franchise even better than those at the brand’s corporate office do. These owners have experiential knowledge, where those employed directly by the brand may not.

It is this great wealth of experientially derived practical knowledge that makes the peer network invaluable. There are very few problems that a new owner will encounter that have not already been dealt with by his or her peers. It is in these times that turning toward peers for guidance can provide a practical solution based on proven strategy. Being able to draw on the experience of peers gives the new franchisee a significant edge.

Franchising has become a marked institution in the United States and, indeed, across the globe. The number of franchising organizations continues to steadily increase as does the percentage of businesses operating under franchising agreements as opposed to independent ownership. This shouldn’t come as any surprise when one considers the decided advantages that franchisees have over independent owners, especially during those risky first 5 years of trying to establish a new business within any community.

One of the most noticeable differences between the independent business and the franchise lies in the area of marketing. There are several marketing factors that contribute to providing an overall edge for the franchise owner. In fact, the aspect of marketing is what provides what is perhaps the single greatest benefit of franchise ownership: brand recognition.

It may seem to almost go without saying, but it does bear consideration – the independent business owner simply cannot ever hope to market on the level that franchising organizations market their franchises. It’s a simple matter of resources and practicality.

Franchisors make their money via royalties and franchising fees collected from their numerous franchisees. To increase their profits, they need to a) insure that every one of their franchises has the best chance of profiting at its greatest capacity and b) that they are bringing in a steady stream of new franchisees. The franchisor cannot hope to accomplish the latter without having accomplished the former. The brand is only appealing to new investors if the existing franchises, on the whole, are doing well.

In order to insure that the individual franchises are doing well, the franchisor has to market broadly and market aggressively. When we say broadly, we do not mean necessarily in the scope of demographic appeal (in fact, many of the more successful brands have become so by narrowing their target demographics significantly). What we mean by broadly is that they market through every available media, be it television, radio, newsprint, magazines, billboards, etc.

Off hand, you can probably think of two dozen advertisements you have seen just today that were representing major franchised brands. These multi-million dollar blitzkrieg campaigns are well beyond the scope of any independent business owner. In truth, such far reaching marketing campaigns would be of little benefit to the independent owner who relies predominately on local business.

However, the massive marketing campaigns of franchisors provide two major benefits to their franchisees. The first being, obviously, that these advertisements are more thoroughly researched and tested to appeal to the target demographics. Consumers want to be dazzled and they tend to be more influenced by ads that pull out all the stops, bells and whistles. The independent owner just can’t hope to gain the celebrity endorsements and high dollar budgeting for such ads.

The ability of franchisors to market broadly and effectively provides the second benefit to franchisees – brand recognition. This benefits the franchisee because they are able to start their business with an already established and accepting customer base. The franchisee also benefits from being able to bring in customers who may not be local, but who, when passing through an area are more likely to visit an establishment with a name they recognize and trust instead of using the goods and services of an unknown independent merchant.

Anyone in business knows that for the past few years, the economy has been seeming to grow more and more unsure- and that can make many people feel a bit leery of investing, or starting up a new business. In tandem with these stories, there are also signs that point to franchising still going strong and in some cases, really becoming more profitable. In recent years, that International Franchise Association, or the IFA has actually reported some surprising trends in growth and profit amongst franchisees, and there may be some good reasons for this. However, one thing is very sure, across the board- in a down economy, franchising is probably a more stable investment than an independent business.

There have been a few reasons that some people believe that franchising may be booming where other businesses are finding it either hard to stay open, or closing their doors all together. For one thing, franchises really cross a wide terrain of financial income levels for start up. From a small home based business franchise which may only take a couple of hundred dollars to start up, to a mega million dollar earner like McDonald’s, there is a franchise out there with a start up that most people can afford. In addition to that, there is a franchise out there for every interest or passion. Not only that, most of these bring about their own training and start up can generally be very quick, making it a much faster road to seeing a profit than other investments. Sometimes, because franchising is based on brand recognition it is easier to obtain start up financing- often this is because the banks and lenders already have a relationship with the franchiser, but sometimes it is based on name.

Also, another benefit of franchising is, it’s pretty easy to take a look around and see if you could be successful in a chosen business venture. Through different research methods, or even just talking to other franchisees- projections on profits and the like are easier to obtain. This makes franchising a more stable option as it is less risky- knowing that you are investing in something that is already successful versus hoping for that success makes it a much less intimidating investment. Many people want to strike out on their own and they want to become self employed- but it’s rightfully so, an intimidating thing- with franchising, there is that knowledge of a proven system of business, coupled with a parent company and other franchisees. The template is already there, so to speak and that often makes people feel much more at ease with franchising, and it can help a great deal. It doesn’t hurt that with most franchises, the business, down to the buildings in some cases- is usually up, running and already turning a profit in the start up days.

Franchising tends to hold its own in a down economy because it does afford a certain level of stability that independent business can’t- it’s not all that different from investing in independent business, the same hard work is needed, however, franchising offers a bit more support and guidance.

You will definitely have to think about how you will finance your franchise, before you even sign anything- more often than not, it’s much better to already have a good handle on your credit and finances before you even begin. You have to be fairly financially prepared, franchises, like any business, are investments and should be looked at in that light. Being very sure of your income, your savings and other assets before you go into it, is key because lenders usually want to know everything. If you are going through some rougher times, understand that lenders may be a bit more tight with the money than they would be, were things more fluid. Also know that no lender will grant you a 100% loan- you’ll need to have some capital built up and lenders want to see you investing some of your own money, as well as a strong business plan.

If you have come to a place financially where you feel that the investment is a sound one that you can manage, then you will need your finance information in order. Put together a folder of all of your tax returns, debts, account balances and other financially pertinent information. Lenders can obtain most things through your credit report, however, not all, and it is still best to be forthcoming. Also bear in mind the sort of franchise that you are looking to invest in, as well as its implications on the lender- more often than not, a bank will be more keen to invest in a better established franchise.

Many franchisors have begin to offer some kind of financing, but this can vary, in both being an alternative to other lenders and in the amount they may offer you. Be aware that this does not always mean that it will be easier to obtain financing or that you’ll have less to worry about with your credit history and other factors. Often times, franchisers are just as stringent about the details as banks are- after all, they do run businesses themselves and they want to ensure their own investments are sound. If you find that you are struggling a little for funding, there are a few options out there, though, there are programs for certain groups of people, and you may be able to obtain the needed loans from friends or family.

However, before you invest in a franchise, you should think about a few things. For instance, consider if you can personally afford to lose the money if the investment goes south, or if you have enough money to support yourself as you go into start up. Also, consider how much you can personally invest and go from there. Finding funding for a franchise should not be looked at differently from any other business, but, there are some benefits, and you should ask the franchiser what options they have seen work out best. More often than not, the biggest benefit is again, having a brand name behind you that already has a stable and profitable business plan that the bank can depend upon.

Deciding to go into business is a major decision and not one to be made lightly.  Starting a business is a daunting task even for the seasoned entrepreneur.  For the first time owner it can be downright overwhelming.  However, it can also be richly rewarding.

Business ownership is a major commitment of money, energy and time.  Many first time owners take the risk and invest much of their life savings into the chance of business ownership.  When making that big of a commitment, it is important to set yourself out on the best footing with the greatest chance of success.

Franchising offers the greatest degree of benefit for both the first time owner and the experienced business investor.  Aligning yourself with a successful franchisor takes much of the guesswork out of business start-up and ownership.  There are also many other benefits to franchise ownership and these many benefits are what have seen franchising become an increasingly large institution in the U.S. and across the world.

One of the biggest benefits inherent in franchising is brand recognition.  An independent business owner, starting a business from scratch, has a tough road ahead in gaining acceptance and establishing a rapport with the business’s target demographics.  The franchise owner, on the other hand, starts his or her business with a pre-established degree of acceptance and a customer base that is already aware of and eager to purchase the business’s goods or services.

Almost half of small businesses fail within the first five years of operation.  The bulk of these floundering businesses are those that operate independently.  The independent business owner simply has a much more difficult time establishing his or her business than the franchisee does.  Franchising takes much of the worry and work of building the business’s name and reputation out of those difficult first few years.

Franchising also offers benefits to franchise owners in the area of marketing.  A business cannot hope to succeed on word of mouth alone.  Every businessman understands the need to market aggressively and expansively.  However, the independent business owner is limited in his or her resources for marketing and in the outlets available for marketing.  Running a national marketing campaign is not only unrealistic for the independent owner, it simply wouldn’t be beneficial for supporting a single location.

For franchisors, though, large scale marketing is not only realistic, but it is almost necessary for success.  For the brand to succeed, as many franchisees as possible must succeed.  Large franchising organizations are able to promote their franchises in ways that the independent owner could never hope to do.  Franchisees, then, benefit from massive multi-media ad campaigns, designed to reach the greatest number of potential customers for all franchisees and equally benefiting all franchises.

By entering into a franchising agreement with a reputable franchisor, the business investor puts him or herself into a much better position to succeed from the onset.  The franchisee, of course, sacrifices a degree of freedom and input into his or her business in exchange.  However, for most, what is given up is very slight in comparison to what is gained by buying into a respectable brand.

When looking into franchising, the options, as far as available franchisors, are almost overwhelming.  Any business that you may have dreamed about going into exists, with multiple brands and business models already established and proving profitable.  Having so many available options can make it difficult during the initial “narrowing down” process of selecting a franchisor.  There are so many questions you have to ask yourself along the way, such as “Do I want to start big, or start small and work my way up?”

The Big Start

If you have a lot of capital and want to start big, there are certainly plenty of options available.  Granted, the larger the franchise, the greater the investment and the greater the risk.  This is why big franchise operations like major motel chains mainly appeal to those who have already established themselves within the industry.  These franchises are very expensive, but can also provide the highest return on investment if handled properly.

Large franchises are intended to be able to reach the greatest amount of customers within a region starting from the moment the doors open for the first time.  However, there is very little room for growth within the individual franchise.  What you start with is generally what you continue on with, with only minimal modification.  The potential for profit is certainly there in a big way, but the potential for growth is minimal.

Building Up

When you go into business as a motel franchisee, or a fast-food chain owner then you start big and, more or less, retain your size with only minimal growth in the franchise and in profits.  On the other hand, if you enter into a franchising agreement with one of the many franchisors that offer small business plans with the potential for almost unrestricted growth, then you are only limited by your own initiative.

When you start small, obviously, you don’t see as much profit as the big guys.  However, you’ve also invested less and you have more control of how your business grows.  There are a number of small franchise, such as waste oil management operations, that can be run from home and whose growth is only limited by the ability and drive of the owner.

This degree of flexibility, freedom and unrestricted potential makes small franchise ownership very appealing.  This small scale model of franchising is especially well suited to first time owners who don’t have a lot to invest and to those who want a hands-on owner operated business.  The owner-operated franchises provide a level of control that bigger franchises cannot.

The Perfect Fit

Small franchises are almost all intended to have a broad potential for growth.  By starting small you are often affording yourself the ability to expand far beyond the scope of what you would have been able to do by purchasing a larger, but more static, franchise.  Over time a small business can become something that rivals big franchises for profitability while retaining the relatively small initial investment and risk.  This makes small franchises not only promising for first time owners, but also the safer investment in many cases.

There are few things in life more satisfying than going into business for yourself.  Of course, the financial benefits are what most of us focus on, but there are great personal benefits as well.  Watching your business grow and flourish is a feeling like no other.

We all want our businesses to succeed, but it takes more than simple desire to succeed in business.  This is especially true in the tumultuous first 5 years.  Purchasing a franchise rather than going into business independently offers a greater chance of weathering those first 5 years, but, of course, nothing is ever guaranteed.  A lot depends on being smart about the franchise you select and basing your decision on solid research.

Utilizing Your Skills

Though many franchises are set up so that a new owner has an excellent chance of success even if he or she has never worked within the industry before.  However, your chances of success are markedly greater if you go with something that you do know and have experience with.  Being aware, at least in a rudimentary way, of the intricacies of the business you will be going into prior to entering into a franchising agreement will give you a definite edge.

This is to say, if you have experience in the fast-food industry, than you will probably do better as an fast-food franchise owner than if you went into the motel business.  Your chances are even better if you buy into a franchising organization that you have already worked under.  There is simply no substitutions for real life knowledge and experience.

Check Out Available Training

Whether you have worked in the industry you hope to go into business in already or not, when selecting a franchisor look at what training they offer.  The fundamental benefit of franchise ownership lies in the maxim “in business for yourself, not by yourself”.  A good franchisor will equip their franchisees with every possible tool for success, including intensive training.

If the franchisor you are looking at does not offer a wide degree of franchisee training and support, then they probably aren’t a wise investment.  If they can’t offer a certain level of business training, then they really don’t offer much more than a name over going into independent business.  This is why it is important to thoroughly research your franchisor candidates before making your final selection.

Do What You Love

Probably the single most important thing to consider when thinking about going into business is what you will enjoy doing.  Going into business is major investment and chances are, at least for the first few years, you will be in complete control and very involved in your business.  Many owners retain that level of hands-on involvement over the entire course of their ownership.

Because business ownership is such a major investment of money, time and energy, it is vital that you pick a franchise that you can really see yourself working at and enjoying long-term.  Again, there is a lot of satisfaction to be gotten from seeing your business boom.  Doing what you love insures that you will be able to continue to give the level of hands-on commitment needed to see that happen.

Of course there are some routine things that a potential business owner will want to look into, however, potential franchisees should take particular care to make sure that they are contacting other franchisees before they invest in a franchise. Making sure that you have the uniform offering circular with the details you need about the way the franchise is set up- the financial, legal and personal history is also important before you sign a franchise agreement.

Before you sign, it’s reasonable to expect that you have the franchise’s backing- that is use of the name, trademark and also their know how in advertising, marketing, facility design and layout, as well as any fixtures and displays. You also need to be sure that you are going to get the benefit of the training and management assistance, and the ability to do business in an area exclusive to you and protected from other franchisees. There are a number of things that you will want to be sure that you are completely clear on, and these are just a few of them. If there is any aspect that you aren’t comfortable with, never be afraid to ask.

In certain situations, franchisees may be able to negotiate with the franchisor in order to purchase of lease equipment, signs and other different supplies, or obtain building permits and remodel the business buildings and premises. Usually, franchisers have a set way of doing things, and because of this, will often enable the franchisee to utilize their resources, or at least offer guidance in obtaining the needed items for start up and other structural needs from training employees and management to sometimes hiring practices.

While it is true that a contract usually benefits the franchisor more than it will the franchisee, the benefits to the franchisee of entering into such an agreement are numerous. Yes, the franchisee will probably need to meet certain sales quotas and may have to purchase the supplies, equipment and inventory needed- but more often than not the franchisor can help in this case, if it is not already a requirement. Adhering to guidelines set under a franchise agreement will be important and not doing so can result in the franchiser, under their rights, terminating the contract and the franchise if it isn’t going with that agreement, or if it violates other contract obligations.

It is usually best before entering into a franchise agreement that you make sure that you have a good support system- like any business. You will need to enlist the help of not only an attorney with franchising experience, but also, an accountant. There are certain tax issues that are specific to franchising, and things that are better addressed by a professional with quite a bit of experience in dealing with the key elements of franchising as it pertains to tax law. Having an attorney go over your franchising agreement before you sign will ensure that your rights are being protected, and that everything is being done as it should be.

The Franchise Disclosure Document is a legal document that you usually will get in the course of looking into a franchise. By law, franchisors must furnish this document to prospective franchisees, and  this generally contains materiel information that will be important to the franchisee in assessing the franchise as a business opportunity. This document is usually packed very full of information, and each piece is a vital part of the overall picture that you need to make a more informed choice. Having this document and being aware of the parts of it is important. Here, we will go into the different parts of the Franchise Disclosure Document and what different changes are in this format for franchisees.

Franchise Disclosure Documents all follow the same format: The franchisor and any predecessors, litigation history, bankruptcies, the franchising fee and any other opening payments, any other fees involved, a statement of the investors initial cost, obligations to the franchisee to purchase from specific sources, obligations to purchase in accordance to standards, financing, obligations of the franchiser itself, designation of territory, trade marks, trade names, logo types, service marks and other commercial symbols, copyrights and patents, obligations of the franchisee to participate in actual operations, restrictions on goods and services,  Renewal, termination, repurchase, modification and assignment of the Franchise Agreement and related information, arrangements with public figures, actual, average, projected or foretasted sales, profits and earnings, information regarding the franchisers’ franchises, financial statements, contracts and lastly, an acknowledgment of receipt.

The FTC rules for franchises changed in 2007- and many people question the differences between the Uniform Franchise Offering Circular, or UFOC and the  FTC Franchise Disclosure Document, or FDD. It is important to bear in mind that the FTC does not require these documents to be filed, but that twenty six states require business opportunity disclosure filings, and thirteen states keep these on file. It’s generally advised that a franchiser give you this document at least fourteen days before you sign a franchise agreement- though the better advice is to be sure you are clear on it well before then.

As of  July 1, 2008 the new format became mandatory. Most people have discovered that franchise closings do go a great deal more smoothly since the change, and it certainly does make delivering the document via electronic means a great deal easier. However, the same rules apply as to this document as did the old- make sure that you have a qualified franchise attorney look it over, and if you have any questions about any part of the document, or anything said in it, always ask for clarification. It is vital that you are absolutely clear on the franchise agreement, and the FDD, more importantly, before you proceed so that you are completely understanding about what you are engaging in.

Knowing the ropes, and knowing what it takes to succeed in franchise ownership is sometimes hard- from the outset, it may seem complicated, but honestly as with any business it boils down to attitude. With almost any franchise opportunity you can look into, you will see that there are people who have had good experiences with it and bad- and depending on the person, they may have had good reasons for either. But one thing is sure, it does take a certain sort of person to become a success in any business, and franchising is definitely no different. When you make the decision to buy any franchise, before you really consider it, take a little time to speak to those who have been successful with it. Those who are still involved with the franchise itself will be able to shed a better light on how to succeed and what sort of pit falls you may encounter.

One of the greatest aspects of franchising is making sure that you are very organized when it comes to accounting. If you don’t have an accountant that manages things- you may need to be a great deal more fastidious about your numbers than one who does. But even if you do have an accountant, there are day to day operations to consider, and a great deal of thought that has to go into those. If you decide, even prior to start up that every bit of the numbers, the money and statistics that you use need to be organized properly, you’ll be off to a better start. Also, the very best way to really get into that habit is to begin with your start up funding and carefully budgeting it down to the last cent and sticking to that budget as best you can. You may find that this helps you keep a mindset of organization, but also, it makes you very aware of your finances, and what is going where and why. This comes into play later on when it comes time to cut losses and balance things further, if need be.

Another aspect of franchising that does differ from your typical independent business is that you do have to really remain communicable with your franchisor. There will be a number of marketing strategies that are usually used, the business itself, and the way that you run things that may depend on this, yes, but there is more to it than that. Keeping an open and clear line of communication with your franchisor keeps you abreast of any changes to system, any innovations that may be in the works, and also maintains a good working relationship as well. Being flexible and adaptable is a great trait to have, and one that will definitely benefit a new franchisee. Though there are great benefits that go along with franchising, looking into it as any other business can help. Successful people understand that in any business, franchising or no, riding the ups and downs in an intelligent way and being able to stick it out is always a key factor in making it work for them.

he Uniform Franchise Offering Circular-Franchise Disclosure Document, or the UFIC/FDD is a document that you will be reading at least ten days before you sign any contracts with a franchisor. Why? Because they have to provide it. Any information that you are going to need to know about the franchise itself will be contained within this document- it will go into the various fees, marketing, royalties, yes, but also, will outline any procedures they have in place for the running of the franchise itself, and the training and support offered, and much, much more.
On your UFIC/FDD, you should see the following sections:

•The Franchisor, Predecessors and Affiliates
•Business Experience
•Litigation
•Bankruptcy
•Initial franchise fees
•Other Fees
•Initial Investment
•Restrictions and Obligations on Products and Services
•Franchisee’s Obligations
•Financing
•Franchisor’s Obligations
•Territory
•Trademarks
•Patents, Copyrights and Proprietary Information
•Participation Obligation
•Restrictions on Goods Sold
•Renewal, Termination, Transfer and Dispute Resolution
•Public Figures
•Earnings Claims
•Outlets
•Financial Statements
•Contracts
And lastly,
•Receipt

These forms usually all come together in a packet before you sign the contract, more often than not- the franchisor will discuss them with you as well. In some states, franchises may have to be registered with the state, in others not, but, all have to conform to the standards set about by the Federal Trade Commission and all will have this package for you to go over, to look through and to understand clearly- it is your responsibility to ensure that you do read through this and make sure that you are aware of everything that it entails and to clarify the areas that you don’t, as soon as possible to make the entire process go much more smoothly. If there are parts of the documents you receive that you are unclear on, in any way, you do have the right to ask, and also, this is a smart business move, setting the stage for more open communication and understanding of your position as a new franchise owner.

Have your financial adviser go over each section with you earnestly, and ask any questions about anything that you do not understand. When you feel like you’ve got a clear picture of exactly everything that a franchise has to offer you, then you can seek out the areas where you might have a little room to negotiate- some franchises will be open to this, others will not, so you have to be clear on what you can and cannot do in regards to that. Typically, a decent franchise attorney will be able to help you on that front, but also, usually the franchise itself will be able to tell you if things are negotiable. The larger the franchise, however, the less likely this is to be the case- so, you’ll want to do your homework on that front as well.

This can all look a bit intimidating on the outset- it’s a great deal of information to take in, but do remember that this is their business, and it’s about to become yours as well.