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    Can you say – FRANCHISE? Did you know that it takes far less money to start a franchise than you imagined – you might be closer to realizing your dream of owning a business more than you think.

    I was thinking, with bank lending and credit being tightly squeezed for entrepreneurs, especially for startups, where might one go to pursue financing for their dream? I believe most entrepreneurs or want-to-be business owners, all have thought of an immediate route to some really big idea that will make them rich and famous, The Road Less Traveled, yet there might be a need to intentionally detour from that path, an unanticipated, yet possibly lucrative stop that might not only help build a stronger business portfolio, but in many instances, will create the equity to pursue your ambitions with a real-sense of autonomy and reward.

    Can you say – FRANCHISE? You already know that franchises are an integral part of the American experience, with McDonalds Subway , Starbucks and others that are burnished into our everyday lives – into our vernaculars – unfortunately into our waistlines. But did you know that it takes far less money to start a franchise than you imagined – you might be closer to realizing your dream of owning a business more than you think.

    The cost of a franchise depends on the franchisor and industry, and other peripheral circumstances. Some of these factors include the size and location of the franchise. Franchise fees generally start at less than $10,000, which is most common among mobile and home-based business franchises, and can go upwards of $100,000.The average franchise fee runs from $20,000 to $30,000, and each franchisor has its own set of financial requirements a franchisee must meet to qualify.

    The International Franchise Association commissioned PriceWaterhouseCoopers to look into the volume and performance of franchises, and they found more than 901,093 American franchises in 2009, a net gain of 18,000, from 883,292 in 2008. The gross value of goods and services produced by franchise businesses, was forecasted to increase 2.8 percent in 2010 to $868.3 billion—an increase of $23.6 billion.

    I have been reading Franchising and Licensing, Two Ways to Build Your Business by Andrew J. Sherman, and he presents a compelling argument why entrepreneurs, especially younger ones, should consider franchising. Some of Sherman’s insights for franchising are:

    1. A proven prototype location that serves as the basis for the operation.

    2. Strong management team.

    3. Sufficient capitalization.

    4. Distinctive and protected trade identity.

    5. Proven and proprietary methods of training and operations.

    6. Field support staff.

    7. Demonstrated market demand for products and services.

    8. Research and development capabilities.

    9. National or uniform advertising programs.

    I think Sherman went further when he stated the “eight commandments” of successful international franchising:

    1. Know strengths and weaknesses.

    2. Know the targeted market.

    3. Due diligence for your partners.

    4. Be aware of the royalty value.

    5. Know the trademark.

    6. Understand the products and services.

    7. Know the resources.

    8. Know the rationale for such the international procession.

    There are no easy or convenient paths to success, but there are roads more accessible that still offer incredible opportunity, with low-barrier costs. For many entrepreneurs, it just might be a hero sandwich, a deep-dish pizza or a Big Mac, that will make the road you travel – the one “less traveled.”

    Good luck.

    Calvin Wilson
    CEO, Upstart

    Upstart: Business and Management for 20-40 Year Old Professionals

    Filed Under: Startup/Entrepreneur


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