Franchising is an appealing option for someone who wants to run a business without having to start it from the ground up. Restaurant franchises are probably the ones that people are most familiar with. Franchises represent great opportunities for success, but those who want to buy a franchise have to be prepared for hard work and watch out for scams.
With the U.S. economy starting to recover after a long slump, franchising is picking up among people who want to run their own show while using a proven business concept. Business.com recently spoke with Bill Bradley of America’s Best Franchises about what’s going on in the world of franchising today.
Q. First of all, can you give us an idea of the enormous range of franchising opportunities available today? What is the most unusual franchise opportunity you have found?
A. There are about 3,500 different franchise opportunities in approximately 40 franchise industries; that would include everything from automotive aftermarket franchises to children’s franchises to senior care opportunities, travel, home maintenance, and franchises that cater to women’s skill sets. It seems there is a franchise for just about any service or product you can think of. Personally, I cannot imagine buying a pet or dog waste removal franchise, though they exist.
Q. The Franchise Disclosure Document (FDD) is something that any potential franchise owner should understand thoroughly. How do you recommend potential franchisees approach the FDD and associated franchise regulations? Should they bring in a franchise lawyer for advice?
A. Getting up close and personal with the FDD is paramount to the decision-making process. I have a venture capital background so I am familiar with the due diligence process. Much of what you find in the FDD is similar to what any venture capitalist would research when determining the value of an investment. In addition to learning everything you can about the executive team, pay particular attention to Item 3, Litigation, Items 5,6, and 7, which discuss the fees associated with the opportunity, franchisee and franchisor obligations. If the FDD includes an Item 19, carefully research the financial performance of current franchisees. Buying a franchise is a long-term commitment. I would highly recommend you hire a franchise attorney in all phases of the process.
Q. Much has been reported in the media about unemployment rates for U.S. veterans. But many franchises are now offering incentives to veterans for opening franchises. Can you describe some of the franchising incentives being offered to our veterans today?
A. The Veterans Transition Franchise Initiative is known as “VetFran.” VetFran was organized to honor those men and women who have served in the U.S. military. I believe there are about 250 member companies that participate in the VetFran program offering various discounts to veterans. MAACO, for example, offers a 25% discount to the initial license fee for qualified veterans. AAMCO offers all veterans an $8,000 discount on the purchase of an AAMCO franchise. CertaPro Painters franchise provides a 10% discount on the franchise fee to military veterans with an honorable discharge.
Q. Your website has a helpful section on the Dos and Don’ts of franchising. Can you share with us the most important steps a potential franchisee should take before committing to a franchise?
A. As with just about any decision or choice in life, you should not assume anything. Learn what questions to ask and don’t be afraid to ask them. Get the answer you are looking for. Current franchisees will be your best source of reliable information. You need to develop a list of questions regarding the franchise opportunity. Ask a variety of franchisees in different locales, including communities that look and feel like your community, and do not back off. Get the answers to your questions so you can make an informed decision about buying a franchise.
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