Question: I've always wanted to own my own small business, but rather than having to come up with a product or service business myself I am thinking about purchasing a franchise. What kind of monetary investment would I need to make to become a franchisee? Would I be provided with some form of training?
— Sam

Response: Franchising is a form of licensing by which the franchisor organization, be it a Jiffy Lube, Color Me Mine or a PetLand, obtains distribution through you, the franchisee.

Starting a franchise is less risky than starting other businesses. As a franchisee you essentially buy the business blueprint and assess how other franchisees have fared with the identical concept.

Job Description
As a franchisee, you would be given exclusive access to a defined geographical area. The service or product you market is identified by a brand name. However, the franchisor generally maintains control over the marketing methods employed.

As a franchisee, you would be responsible for overseeing operations according to standards of quality as determined by the franchisor. In return, franchisors may provide such services as location analysis, initial employee management and training, and advertising assistance.

Questions you should ask before investing in a franchise include:

• Is there a market for the service or product in the territory available at the prices that will be charged?

• Will the population in the territory increase, remain static or decrease over the next five years?

• What competition already exists in the territory from both franchise and non-franchise firms?

Investment
The amount of capital needed to invest in a franchisee is determined by the franchisor. For example, PetLand requires a minimum investment of $105,000 to $125,000.

In addition to minimum investment, there are other operating costs involved in starting up a PetLand franchise. Most franchisors provide a "total" expected investment range. You use this to gauge how much investment money will be needed to both start up and operate a franchise. Operating costs can include initial inventory expenses, training and equipment. For example, Petland's total expected investment ranges from approximately $600,000 to $800,000.

Franchisors will want to look at your net worth, including liquid assets and non-liquid assets such as home ownership. For an idea of what various franchisors are looking for, you might want to refer to the professional association resource listed below. It provides a listing of available opportunities in franchising along with information on required minimum investment:
Franchise Update
www.franchise-update.com
This is an online information resource on franchising that provides a listing of franchise opportunities sorted by industry and investment level.

The following publication provides a listing of the top 500 franchises.
Entrepreneur Magazine
www.entrepreneur.com
Currently, the top 10 franchises are the following:

1. Subway

2. Quiznos

3. Curves

4. The UPS Store

5. Jackson Hewitt Tax Service

6. Dunkin Donuts

7. Jani-King

8. Re/Max International

9. 7-Eleven

10. Liberty Tax Service

Training
Most franchisors provide short-term training on topics relevant to starting up and running a successful franchise. For example, the automotive service company Midas offers a five-week training course. This involves two weeks of on-site training at a local franchise and three weeks of in-class training at their company headquarters location in Palatine, IL.

Course topics include inventory management, customer retention and cost control. You would likely be responsible for travel costs to the company headquarters site. However, the training is free.

Ongoing support is often provided to franchisees including periodic regional meetings on strategic planning for franchisee success as well as national conferences.

Professional Associations
The following are professional associations that could serve as additional resources on franchising.
The American Franchise Association
(312) 431-0545
Fax: (312) 431-1132
www.franchisee.org
This is a national trade association of franchisees and dealers serving thousands of individuals who own over 30,000 franchised outlets in 60 different industries. The membership is exclusive to franchise associations and consultants to the franchising industry. But some resources are available to non-members including articles on franchising and a listing of publications plus audio seminars such as the Buying a Franchise: How to Make the Right Choice, which costs $49.95.
International Franchise Association (IFA)
(202) 628-8000
Fax (202) 628-0812
www.franchise.org
Contact: Rose DuPont, Certification Information
(202) 662-0771
This is a membership organization of franchisers, franchisees and suppliers. Membership benefits include networking opportunities through online discussion forums, online courses on such topics as plan development, and discounts on educational publications such as Investigate Before Investing. According to the IFA web site, the association offers a free online seminar, Franchising Basics: the Official IFA Course. Annual franchisee membership dues are $100

Earnings
As the owner of a franchise, your earnings will be variable, especially during the first two or three years, as is often the case with owning and running an independent small business. However, you can determine how much franchisees are earning in a territory that is similar to yours.

For example, the estimated franchise fee for Color Me Mine locations in Southern California ranges from approximately $150,000 to $250,000, which includes training costs. Nationally, Color Me Mine franchisees have average annual gross sales of $250,000, with a net to the owner/operator of $45,000, but generally these figures are higher in California.
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Susan W. Miller, M.A., is a National Certified Career Counselor, a Certified Vocational Evaluation Specialist and holds diplomate status on the American Board of Vocational Experts. She heads California Career Services, a private practice career counseling firm in Los Angeles.

E-mail career questions you'd like answered in this column to info@californiacareerservices.com or visit California Career Services at www.californiacareerservices.com.