Word to the Wise
A few things to consider before tackling franchising
Last month, we discussed the opportunities franchising offers
educated professionals. But we would be remiss not to warn you
about several key things to be aware of-factors that could spell
disaster if not well-thought-out.
If you're from the business or professional world,
franchising can feel like a different universe. Scott Shane,
economics professor at Case Western Reserve University in Cleveland,
points out a couple of differences:
- A franchise is both
a job and an investment. Choose poorly, and your life is
significantly impacted.
- Owning a franchise
doesn't mean you've got carte blanche. You still
have a franchisor to report to, and you still have monthly
royalties to pay.
If your strong point is education rather than experience, you
should realize there are business skills necessary to running a
franchise successfully. Assess what the franchise requires and
whether you have those skills.
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Many ex-corporate professionals may be enticed by the idea of
multiunit franchises and consider running a mini-empire more
appealing than a single unit. With so much capital involved, Shane
warns that extra caution is warranted. "You could end up with
a lemon if you don't look carefully," he says.
Unfortunately, Shane adds, a small segment of the franchising
sector looks to target ex-corporate execs-this segment could be
more interested in unloading multiple units than running a
franchise system and supporting franchisees.
But for the professionals who've done their homework and
found the right fit, their investments result in passion and
profit.