At a Loss?

A Call For Backup

Need a business with support? Try a franchise on for size.

If the thought of starting your business from scratch seems overwhelming, buying a franchise can be an excellent alternative. A common saying about franchising is that it puts you in business "for yourself, but not by yourself." So what does that mean? As a franchisee, you pay an initial fee and ongoing royalties to a franchisor. In return, you receive the right to use the company's trademark, initial training and ongoing support, and the franchise's system of doing business.

A growing number of former corporate employees are choosing the franchise option to ease the transition to entrepreneurship. If in your prior job you were used to delegating tasks, doing everything yourself as an entrepreneur can be jarring. Buying a franchise can offer the support you need to make the switch.

How do you choose the right franchise? Start by investigating industries that interest you, then analyze your geographic area to see whether there's a market for that type of business. Contact all the franchise companies in those industries and ask them for information. (For details on nearly 1,000 franchisors, check out Franchise Zone.)

The following articles and sections of our site will help you research, evaluate, finance and purchase a franchise that's right for you.

Don't rely solely on a company's promotional materials, however. Read magazines, newspapers and articles on the Internet about the company. Does it seem to be well-run and well-respected? Check with the Better Business Bureau and consumer or franchise regulators in your state to see whether there are complaints against the company. (Visit the Federal Trade Commission's Web site for information about investigating a franchise.)

Still interested? Contact the company and ask for a copy of its Uniform Franchise Offering Circular. Among other things, this document contains an extensive description of the company, its programs and costs, any litigation against it, and contractual obligations for you and the franchisor. You, your attorney and your accountant should all review the UFOC thoroughly.

An important part of the UFOC is its listing of current and former franchisees, including contact information. Contact several-in both categories-and interview them about what it's like to be part of this franchise system. Was the franchisor's training program helpful? Have there been any unexpected problems? What's a typical day like? Are profits as expected? Volunteer to work at a franchisee's location to see what it's really like.

When the research is done, your choice often comes down to gut instinct. That's why chatting with franchisees and getting a feel for the business are so important.

"A Call For Backup" is adapted from Start Your Own Business: The Only Start-Up Book You'll Ever Need (Entrepreneur Press) by Rieva Lesonsky and the staff of Entrepreneur magazine.

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Barry Farber is the author of 11 books on sales, management and peak performance. His latest release, "Diamond in the Rough" CD program, is based on his book, radio and television show. Visit him at, or email him at

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This article was originally published in the July 2001 print edition of Entrepreneur with the headline: At a Loss?.

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