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Fascinated by franchises? 5 things to know

Additionally, call up franchise owners in your region and in other states. Don't just take stock answers. Push for insight and ask for the inside story on whether the franchiser lives up to the promises hyped in presentations. After all, the retail churn, or customer loss over time, for many second-rate retail brands can be brutal, with some concepts lasting less than five years.

Finally, ask yourself how original and unique is the brand concept? Is it a derivative, copycat idea, jumping on a consumer fad?

Recognize you can't change the franchiser

John Hayes is a former franchise owner who runs and has written 18 books on business and franchising. He sees the recent uptick in interest in franchising as a symptom of the business cycle.

"In all the recessions, that's what always happens. The unemployed and downsized folks with severance packages and golden parachutes try franchising," Hayes says. "People often do not understand that a franchise is a system for operating a business. It's not your system. You can't do it your way. You can't change the franchiser. Why buy the system and (not) follow it?"

The transition to franchise owner can often be frustrating for former executives with an independent or creative streak.

Hayes has a list of 92 questions all would-be franchisees should ask before making a choice, including No. 9: Would I really prefer to create my own system rather than follow another system?

Many frustrated franchisees fail to recognize the tight restrictions of a franchisee-franchiser relationship. The systems can be painstakingly strict and dictate the minutiae of how the business is run, from the kind of napkin holders used to the hours a certain food item can be sold in a restaurant franchise.

If you harbor dreams of creative expression and the life of an experimental chef, you'll likely be unhappy running a franchise food concept and should be thinking about starting your own restaurant instead.

Know and understand your legal rights

The Federal Trade Commission offers "Buying a Franchise: A Consumer Guide" as a guide that includes a somewhat sobering take on franchise growth:

"A growing franchise system increases the franchiser's name and brand recognition and may enable you to attract customers. But growth alone doesn't ensure successful franchisees. Indeed, a company that grows too quickly may not be able to support its franchisees with the support services it promises them. Investigate the franchiser's financial assets and resources; are they sufficient to support the franchisees?"


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