Hot Opportunities In Franchising

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Author John Towler, Ph.D.
Original Publication Exchange Magazine

A look at how entering franchising brings success to many people.

How would you like to be your own boss, make lots of money, and be in control of when you work? Sounds like a dream, doesn’t it? The truth of the matter is that thousands of people are doing just this. Starting with relatively minor investments and little or no business or management experience, people are making money and having fun in their own businesses by franchising.

Now wait. I can hear you saying, "Oh, sure, another of these get-rich schemes. Nothing more than a come-on for suckers." Well, I've got news for you. First of all, franchising has been around for a longtime and it's not only here to stay, it’s the wave of the future. Second, you can make a lot of money in it, and there are thousands of franchisees out there that will tell you they are enjoying them-selves and would never go back to their old jobs. Most telling, perhaps, is that it is not uncommon for a franchise owner to earn a pre-tax income of more than $70,000 in the first year of operation!

Franchising can be the best business opportunity you've ever seen. The failure rate of new, independent businesses runs at about 80%. However, statistics show that franchised operations have a success rate of 80%. It's really the best of both worlds — a proven business concept that has been tested and refined by somebody else, coupled with all the training and support you need to make it work for you. Need more convincing? Consider this. As early as 1986, franchises accounted for 33% of all retail sales in the United States, for a total of (are you ready for this?) $487billion. What's more, 50% of what you buy is be purchased from a franchised outlet.

Franchising really isn't new at all, but it is growing in popularity and importance. It's generally agreed that it started in the United States in 1863 when the Singer company began using independent owners to distribute its sewing machines. General Motors began to franchise in 1898, and Rexall Drugs entered the scene in 1901.Franchising moved at a steady pace and, even during the '20's and depressed '30's, franchising continued. However, the phenomenon really took off in the '50's; in fact, 90% of all franchises in operation today began business after 1954. This was a boom period; with many now famous companies starting up, such as Holiday Inn, McDonald's, and Kentucky Fried Chicken.

Now, in case I have you all steamed up and ready to rush out and purchase a franchise tomorrow, let me hasten to add that franchises are not for everyone. You have to have start-up money, a great deal of drive and energy, and enough financial and emotional sup-port to see you through your first year. Franchisers are very careful about picking the best people to whom to sell a franchise. Be prepared to have them look you over just as carefully as you are examining them. Both of you want to be sure you can be winners. Now, what about the money?

The good news is that franchise fees can range from as little as $5,000 up to$50,000. However, this is just the cost of buying into the system. You may also be required to construct a building to the franchisor's specifications or rent allocation chosen by the franchisor, and to accept a large and expensive inventory of products, all at your expense. A franchise for some fast food restaurants may cost only $15,000, but you will have to have an additional $300,000 to$700,000 to build and stock your location. You have to consider the ultimate return on your investment, too. You probably won't be able to drive anew Porsche if you don't choose the right business.

While fast-food restaurants spring to mind when we think about franchises there are hundreds of other opportunities that are just as attractive, and perhaps even more so. Maybe you are the kind of person who loves cars and wouldn't mind running a transmission or a lube shop. On the other hand, maybe you would be happier with an elegant gift shop, a motel, or a consulting service. The opportunities are endless. If you want to be on the leading edge of the newest and hottest franchises for the future, consider these trends:

Eating out is on the increase, and there is shift toward "healthier, lighter" foods. Home delivery or mobile food vans will be an important part of the marketplace in the next few years.

Convenience stores and specialty food shops will grow rapidly in high-density urban areas.

Auto products and services are expected to increase in demand, with quick-lube-and-oil-change shops leading the pack.

Anything related to leisure and travel will be a good bet as we increase our weekend and vacation travel expenditures.

Construction, home improvement, and cleaning services are all part of a new growth sector.

Equipment, car, and truck rentals are also rapidly expanding.

Business services are the next big growth area in the years to come.

Regardless of whether it involves printing shops, accounting or employment services, business systems, or management and training services, this will be a hot sector. Sales for this group are increasing at the rate of $2 billion a year in the United States and are now generating billions annually. If you are looking for a new challenge, a new career, and more independence, you should consider a franchise.

John Towler is a Psychologist and the founder of Creative Organizational Design. Please send comments about this article to jtowler@creativeorgdesign.com. For more information, please contact us.

Re-printable with permission.