To Franchise or Not to Franchise

Is your business ready to take the next step?

The growth of small businesses in the African American community continues to rise despite the current economic conditions. According to a 2006 Census Bureau report, the number of black-owned businesses in the U. S. grew by 45% between 1997 and 2002, more than four times the national rate for all businesses.

Today’s tough economic environment has created heightened interest in an alternative to traditional small business ownership—franchising. The franchise arena can be a rewarding career option for professionals who want a change from corporate America and desire entrepreneurship.

Purchasing an existing franchise is often regarded as a feasible way to reach one’s dream of entrepreneurship. However, few realize that it’s the owner of the franchise system (the franchisor), not the franchisee, who retains control and accumulates the most wealth.

“There’s no shortage of African American franchisees, but there are very few of them who are willing to step out and become franchisors,” says Robert Kushell, president of Kushell Associates Inc, a franchise development company based in Chapel Hill, North Carolina.

To determine if you’re ready to franchise, ask yourself:

Is your business profitable? “One can not franchise an idea. You have to prove that your core business is profitable by having a track record of growth and profitability,” Kushell says.

In addition to tracking growth, you need to understand how factors such as property taxes, zoning laws, and demographics will affect business. Miriam L. Brewer, director of diversity at the International Franchise Association (IFA), recommends working with your city’s Economic Development Office when examining market conditions and the ideal location for your franchise.

“Each city has a master plan that details exactly what’s going to happen in a particular area,” Brewer says. “It’s a good resource to use when compiling data regarding both present and future locations of roads, housing, business parks, and shopping centers.”

The IFA, a membership organization comprised of franchisors, franchisees, and suppliers, provides guests and its members a host of pertinent information about the franchise arena.

Is there growth potential? Examine both current and long-term market trends and conditions for your product or service. Is there growth or consolidation in the market and how will it affect your business in the future?

To answer these questions and other pertinent information regarding growth trends and economic forecasting, contact your local Small Business Development Center (SBDC). Funded in part by the Small Business Administration (SBA), the SBDC is a one-stop resource that offers no-cost advice, counseling, and support to prospective and existing small business owners.

Operating in over 1,000 offices across the U.S. and its territories, the SBDC also offers low-cost training workshops and seminars that cover a variety of topics related to small business ownership. Many centers offer economic analysis and forecasting for various industries.

To find your local SBDC counselor, go to www.asbdc-us.org.

What makes you different? Understand what differentiates you from your competition. A distinctive product or service, diverse target markets, a unique marketing strategy, or reduced investment costs will set you apart from others.

“Franchising should be treated as a separate business outside of your core business,”

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