Franchising lacks buzz, but may be successful option

With so many people looking for a job, or looking to replace a lost job with their own business, it's somewhat surprising that there isn't more buzz about franchising.

Money — or, more correctly, the lack of money — seems to be the reason.

Yet, as we'll discover next week when we explore franchising with Jim Delaney, seven months into ownership of a Speedpro Imaging franchise in Lombard, franchises can be successful. The key, according to Delaney, is understanding both yourself and what the business you choose requires.

Money does count, however, although John McLellan says, “There are a variety of affordable franchise opportunities under $100,000.” That's still a bundle, especially for business owner wannabes who traditionally have used home equity or 401(k) dollars to finance a start up of their own or a franchise.

McLellan, who in February purchased the Chicago office of FranNet, a franchise-like company that seeks to bring franchisers (the company) and potential franchisees (people like you and me) together, notes that options exist.

“Not everything is fast food,” he says. “Staffing franchises have done very well. So have franchises that can take advantage of lifestyle changes. Great Clips is a hair-care franchise that benefits from people cutting back on higher end hair cutting.”

Residential house cleaning and senior care franchises also do well, McLellan says.

“The beauty of a franchise is that you see what you get,” says David Gay, manager of the Illinois Small Business Development Center at College of DuPage in Lisle and a longtime small-business counselor. “If you do your due diligence — read the offering circular and talk to the people in the trenches — buying a franchise is much less risky that starting a business from scratch.”

Part of that due diligence is “quantifying the assistance value of the franchise,” says Catherine Jones, executive director of the Shah Center for Corporate Training and the Illinois SBDC at McHenry County College in McHenry.

“Understand your own capabilities,” Jones advises potential franchisees. “Do a side-by-side comparison of what the franchiser offers and the skills you already have.”

If the franchiser offers accounting or marketing support that aren't your strong points, that's a potential benefit. If, on the other hand, your skill set and the franchiser's support are similar, you're likely to gain less from the dollars you invest.

Delany did the type of analysis Jones suggests. By design, he wound up in an entirely new industry. According to McLellan, that's not unusual.

Three-quarters of the franchisees he sees “go to a different industry.” With good (franchiser) support, especially training and marketing, McLellan says, an industry switch is doable.

If owning a business is an idea you can't quite shake, Delaney's thought process as he made the yes-or-no franchise decision should be helpful. That's next week's column.

Ÿ JKendall@

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