Analyze This

Sure, you can buy a franchise in almost any industry you're interested in, but it still pays to take a closer look before you leap.

Franchising is the most successful device for small-business ownership ever invented. One person invests his or her own capital and builds a retail concept using the trademark and proven business systems of the franchisor, all while tapping the power of group purchasing and advertising. This uniquely American concept is now being exported to the far reaches of the globe--McDonald's recently announced that in the first six months of 1999, it opened 523 restaurants outside the United States and that its restaurant in Gibraltar marked 117 countries now spanned by the Golden Arches. Truly, there's no end in sight. Franchising is minting new millionaires both in the United States and abroad at an unprecedented clip.

The franchise method of distribution has been adopted in virtually every category of small business you can imagine. What started with the great American hamburger is now found in service industries throughout the booming economy.

How can you get in on the action? Buying a franchise is a complicated investment, every bit as challenging as starting an independent business. With a franchise, though, you have the benefit of receiving training and assistance from an experienced organization that has gone through the process many times before.

The first step is to recognize there is an information challenge. There's no way around it--buying a franchise takes research.


Andrew A. Caffey is an attorney in the Washington, DC, area, and an internationally recognized specialist in franchise and business opportunity law. You can reach him at acaffey@compuserve.com

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This article was originally published in the January 2000 print edition of Entrepreneur with the headline: Analyze This.

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