Learn about franchising opportunities that go beyond fast food chains.
When people think of franchising opportunities, they often imagine burger joints and restaurant chains. While it's true that the food services industry creates many profitable franchising opportunities, there are a number of other types of franchises that an entrepreneur can start. According to AllBusiness, about 16,000 new franchises were started between 2003 and 2008, a trend that they expect to continue through 2009.
According to the State of Wisconsin Department of Financial Institutions, franchising is when an entrepreneur pays a company a fee in order to conduct business under its brand name. While the details vary depending on the company, a franchise agreement includes the use of the company's name and registered trademarks, marketing plan and training program.
The franchise owner is responsible for covering the costs of running the business. The owner may also be responsible for maintaining certain standards, selling certain types of products and paying royalty fees to the company.
Many everyday businesses can be bought as a franchise. Restaurant franchises like Subway, McDonalds and Pizza Hut are popular choices because many people are familiar with their brand names. However, there are other franchises that can be profitable. In fact, half of Entrepreneur's top 10 franchises are not fast food restaurants; they include Liberty Tax Service, InterContinental Hotels Group, Ace Hardware Corp., The UPS Store and Circle K.
Franchises can be easy to open, requiring relatively low startup costs. For example, some of the best low-cost franchising opportunities include Jani-King, Instant Tax Service, Jan-Pro Franchising Int'l Inc., Kumon Math & Reading Centers and ServiceMaster Clean.
Entrepreneurs who are not interested in fast food franchises may want to consider looking for franchises in the following industries:
Entrepreneurs should weigh many options before deciding on a franchise opportunity. The first consideration, of course, should be how much they are willing to spend on the business. Some franchises have higher starting costs than others. For example, restaurants may need land to build a stand-alone building or retail stores may have to purchase merchandise. Service-oriented franchises, on the other hand, do not require as much money to start.
Some franchise businesses require special skills from the entrepreneur. A tax preparation franchise or an auto repair franchise, for example, will require the business owner to have knowledge of these types of skills. The entrepreneur is also responsible for researching the business climate, including demand and competition. Logically, it is important to determine whether there is demand for a particular product before spending money on a franchise.
Another thing that should be factored into the decision is the level of training that the franchise company offers its franchisees. Some companies offer extensive training, including in-house workshops and training manuals, while others provide minimal employee support. If the franchisee already has significant business experience and training, then he or she may not need the same level of training support that a beginner would need.
There are a number of fees that are associated with starting a franchise that potential business owners must be prepared to cover, either through personal investment or by acquiring business loans. Many parent companies require franchisees to have a certain level of net worth, often in the hundreds of thousands of dollars, some of which must be liquid.
The franchisee must pay an initial franchising fee to the company in order to get the rights to use the business name and concept. This includes training and access to company secrets. Depending on the size of the company and its regional popularity, this cost could range from about $5,000 to well over $100,000.
Aside from the initial fee to the franchisor, the franchisee must also have enough money to cover other initial costs of starting the business, such as purchasing or leasing a business space, paying for equipment and hiring employees. Entrepreneurs should be sure to factor in the loan application fees and any government-required licensure fees as well.
Some franchising opportunities can be run out of the franchisee's home, which can help save on some of the costs of running a business. These types of franchises are typically service-oriented businesses, such as cleaning services, where owners must travel to the customers' homes or businesses.