In the 2011 Franchise Business Economic Outlook, PricewaterhouseCoopers (PwC) projects 784,802 franchised businesses to account for nearly 8 million jobs and $740 billion in economic output. “Concepts that require less startup capital may be more attractive for some entrepreneurs in this continued challenging credit environment,” says Matthew A. Haller, a spokesman for the International Franchise Association in Washington, D.C. For that reason, black enterprise decided to highlight a pair of home-based franchise opportunities from our 40 Best Franchises for African Americans (see www.blacken terprise.com/lists/franchise-list), and detail how to maneuver pitfalls and identify the right home-based business for you.
FINDING OPPORTUNITIES, WEIGHING COSTS
If you’re looking for franchises that give you the option of working out of your home, start with service-based businesses, says Rick Bisio, a franchise consultant and the author of The Educated Franchisee: The How-To Book for Choosing a Winning Franchise (Bascom Hill Publishing Group; $18.95). Food service and product-oriented franchises typically require a storefront or office to house inventory and interact with customers.
According to PwC, franchises that offer personal services, which include education, healthcare, entertainment and recreation, laundry, and transportation, will see a 2.5% increase in the number of franchise units this year. On the other hand, those offering business services, such as employment help, tax preparation, and office administration may actually see opportunities decline since the number of units is expected to decrease from 92,937 units in 2010 to 92,714 units in 2011. To ensure that you’re dealing with a reputable franchise operator, ask for a copy of their Franchise Disclosure Document (FDD), a form that provides information about a franchise and how it is run.
Home-based franchises have lower build-out costs because you don’t have to create an environment where a customer can come and visit. You also have lower fixed-costs since you don’t have to pay for rent or utilities outside your home, or hire staff to man the front desk. That translates to a faster time to market.