Buying a franchise: Should you consider it?

We have mentioned that the Small Business Administration reports a first-year failure rate of over 30 percent for independently owned, non-franchised business. The flip side of that is the statement by the U.S. Department of Commerce that annually since 1971, less than 5 percent of franchise outlets have failed. Not to mention that nearly 50 percent of all retail sales in America come from franchising.

The lure of buying a franchise is compelling. The franchise comes with a total formula for success, a manual complete with parking lot layout and a big brother ready to answer questions 24 hours a day. It also comes with a big name.

"Franchising works because of age-old things like shared advertising -- but especially brand awareness," says Ted Dixon, editor and publisher of the Franchise Annual Directory in Lewiston, N.Y., a publication that has listed thousands of domestic and foreign franchisers since 1969. "We're brand-driven in America, from the jeans we wear to what we want to eat, so franchising is stronger then ever."