"Overall, it's a wonderful way to make a living if you're familiar with what you're doing and you have experience," said Stephen Rosenstein, co-chairman of the Greater Baltimore SCORE chapter, who counsels entrepreneurs and small business owners. (Rosenstein writes a column on small business for The Sun.)
With those general principles in mind, consider investigating numerous franchise options before deciding whether it's the right choice for you, business consultants say.
There are about 3,000 franchise systems and 900,000 franchised businesses in the United States, according to the International Franchise Association.
The franchise industry grew at a faster pace than other sectors in the U.S. economy between 2001 and 2005, generating 11 million jobs and $800 billion in sales, goods and services, according to a PricewaterhouseCoopers study commissioned by the association.
A myriad of industries, brands, services and products exist to fit many different interests, skills and experience. Franchise concepts include everything from restaurants to health and beauty shops to real estate to various types of services, including automotive, maintenance and tax preparation.
Maryland, for example, is the home of a well-recognized education franchise: Sylvan Learning Inc., which is seeking to expand its tutoring franchise business.
Upfront investments can be as low as $20,000 to several millions for, say, a hotel brand. The average franchise agreement is 10 years.
Most importantly, prospective franchisees need to understand the franchise system of a particular brand or service.
One way to do that is to obtain a copy of the franchise disclosure document, which the parent company must provide by law before any money or agreement is exchanged.
This document includes information on the franchiser, the company's key management staff, its bankruptcy and litigation history, fees involved in opening and running a franchise, investment requirements, the franchise agreement and contact information for current franchisees.
"If a franchise would not provide the document until late in the process, that's a red flag," said Britt Schroeter, owner of FranChoice, a Towson franchise consultant firm. "It should be something that good franchises should be willing to give you early on."
Schroeter, who previously worked as Sylvan's director of franchise development, helps entrepreneurs identify their interests as well as business and personality characteristics to match them with various franchise options.
