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Playing It Right

As an entrepreneur, taking risks is part of your nature. But when it comes to franchise research, it doesn't pay to gamble. Keep these points in mind before choosing a franchise.

Entrepreneurs and Vegas gamblers have a few things in common: They find thrill in taking risks, play the house odds and don't like losing. They also share this hard fact: A percentage of them do lose.

Franchising has always appealed to entrepreneurs who want better than house odds of success for their hard-earned investment. And while buying a franchise is no guarantee of success, it opens the way for a new bet--sharing a portion of the upside with the franchisor, in exchange for training, assistance and a marketplace identity that softens the downside of an entrepreneur's business risk.

Franchising offers other valuable resources for an investor: information, expertise and support. It transforms the establishment of a new business from a solitary experience into something quite different--a group experience, where members of the group eagerly share their own experience in doing the exact thing you're attempting. Even better, key information about that experience is required by law to be delivered to you before you make the decision to invest in a franchise. You are buying the franchisor's expertise in the process of building a successful new business and putting that expertise to work for your benefit.

Here's what the infomercial won't tell you: You can lose your shirt buying into a franchise, and you have every reason to approach the investment with caution.

Evaluate Your Hand
The first step in managing your risk when buying a franchise is to do a little personal evaluation and planning so you can narrow down the scope of your choices. Jot down what you think you'll enjoy about owning a business, your personal goals and the franchise ideas you've seen that appeal to you. Take stock of your resources so you know what you can afford and can assess your borrowing power.

Get in the Game
How do you take your focused vision to the marketplace and find a great franchise program? One of the best places to start is a franchise business opportunity trade show. You'll find these shows in most major cities nationwide. They're a great introduction to the market. Going to a show gives you a chance to meet with the people who actually offer the franchise. Ask them questions, pester them about the money involved, and, if you're interested, be sure to give them your contact information for a follow-up package.

Online Exclusive
For everything you need to know about buying a franchise, visit our Franchise Zone.

Spend some time on the Internet looking through franchise information. You'll find a mind-spinning variety of franchise information at sites like Entrepreneur.com. Also, stop by the FTC's site for some excellent cautionary advice and a look at some of their enforcement activities. If you have your eye on a few franchise programs, find their home pages for some basic information, and sign up to have additional information sent to you. It won't take long before you are inundated with information on the opportunities you have identified.

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This article was originally published in the October 2003 print edition of Entrepreneur's StartUps with the headline: Playing It Right.

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