Let's assume you want to be wealthy and that you've realized working for someone else may not be the fastest way to achieve that goal. Some of us have to bear with this ambition sooner than others. I started my first business at age 5. It was a restaurant. My partner (my 3-year-old sister, Susan) and I worked tirelessly to offer a comprehensive casual dining experience.
Our marketing campaign was simple--we posted a very colorful handcrafted sign on the front porch, and we waited. Sales were dismal. By 8 p.m. that first day, after consuming a good portion of our inventory, we shut down. Patience, perseverance and experience are not inherent virtues of a 5-year-old CEO, but time was on our side. Our careers could recover.
You probably don't have that kind of time on your hands. You've realized it's time to step up to the plate and swing for the fences-the years are going by faster, and soon, the car, the house, the spouse and the baby will require more and more cash. Many middle-aged people I've met are so ensnarled in this trap that an escape from a day job is incomprehensible. By contrast, you're probably loaded with energy-and a solid franchise system can be a perfect complement to the natural attributes of youth.
Franchises come in all flavors. In sorting through the morass of options, I spoke with Dallas franchise attorney Don McClure, who agreed with me that there is an ideal combination of factors to look for when entering this field without a great deal of capital or experience. According to McClure, "A prospective franchisee must focus on selecting a growing opportunity that presents a real chance for success." Now, that seems like an obvious statement, but it's worthy of dissection.
One of the primary considerations is the experience level of the franchisor as well as where that franchisor stands in the growth curve of its system. If you want to build an empire, you should select a growing opportunity-but not necessarily a new opportunity. (After all, somebody has to know what they're doing.)
On the other end of the spectrum, a fully mature system could have a policy (one you won't find in the UFOC) limiting the number of units that you can develop. In most of the less-expensive concepts, your chances of building wealth will be enhanced if you're able to run a larger-scale operation as opposed to a single unit. Therefore, it is imperative that you ask the management and some of the older franchisees in the system if anything exists that would prevent you from expanding. You should also try to secure options for other territories when possible.
Another attribute to look for is affordability. My definition of affordability is broader than the initial cost involved. You must also be able to afford the time necessary to make your business thrive. A good way to think about a business risk is to have the confidence that even if everything goes wrong with your decision, the ramifications will not financially ruin you. Going into business is akin to an educated gamble, and the same axioms apply: Namely, don't bet more than you can afford to lose. For those of us with limited means, we may have to begin our franchise experience in a service business or in a retail concept that does not require huge levels of inventory or labor.
While paying attention to these factors, I wanted to highlight three franchise opportunities that seem to offer the appropriate level of risk and reward for first-time franchisees. On a personal basis, these franchisors also seem to recognize that an individual's attitude and tenacity can overcome a low financial net worth.