Tuesday, November 21, 2006

Pros And Cons Of Owning A Franchise

Q. I'm doing research about starting or buying a business. What are the advantages and disadvantages of buying a franchise?

A. One plus is that you gain the experience and proven operating system of the franchisor, according to the International Franchise Association. One of the minuses is the restriction of having to follow a set system.

Other advantages are training, possible access to cheaper supplies because you're part of a large buying group, ongoing advice, and research and development through the franchise system, the IFA said.

Another challenge is costs, which tend to be higher than starting on your own.

What many would-be franchisees don't realize is that a franchise is not a guaranteed success, that it might take a long time to be profitable and that it can take a great deal of time, labor and financial resources, IFA said.

Q. Where can I get statistics about franchising in my area?

A. The financial services company PricewaterhouseCoopers conducted a report for the IFA Educational Foundation, which is broken down by state and congressional district. The information from that report, "The Economic Impact of Franchised Businesses" can be accessed online at www.franchise.org/content.asp?contentid=681.

Q. What is the best source of information about a franchise?

A. You should carefully read the franchisor's Uniform Franchise Offering Circular required by the U.S. Federal Trade Commission and some state laws, the IFA said.

You should also talk with current and former franchisees and accountants or attorneys who specialize in franchising.