Six things to know before starting a franchise

Six things to know before starting a franchise
Before taking the plunge to open your own franchise, consider this advice from franchise consultants:

YOU’LL BE FLYING SOLO
Franchisees think they were getting a business in a box. They thought if they bought a brand, people would start walking through the door. But after two weeks of training, you’re on your own.
These people never had to sell the product before. They never did taxes. Never did payroll. Managing a business and all the aspects around the business is a major learning curve.
Franchisees are really buying themselves a job. They’re not buying themselves a cash machine. Go into it expecting to make between $35,000 to $60,000 a year.

- Bill Reicherter, president of ZeeZone International, a resource and networking Web site for franchises

HAVE A CASH STASH

The people best suited now, because of the credit crunch, have a nest egg saved up and are dipping into life savings. It’s very scary to dip into that because there are no guarantees in the world of investing.
Although some landlords are willing to make deals, many are so nervous and scared that they are asking for bigger security deposits and want more guarantees.

- Robert Zarco, franchise attorney with the law firm Zarco, Einhron, Salkowski & Brito in Miami

MONEY WILL BE TIGHT

Before opening a franchise, be sure to have money put away for living expenses that will last six months to a year.
You used to be able to get a loan with credit scores in the mid 600s, but it’s much tougher today. We’re seeing people really having to be over 700 for the most part.

- Jim Sebastiano, MatchPoint franchise consultant

DON’T GET SUCKERED

Review the Franchise Disclosure Document very carefully and realize that not everything can be what it seems. It may say 90 percent of the stores are a success. They don’t tell you that same store that’s a success had five owners go through it in a few years.
Ask a lot of questions. Don’t get sold on anything. A good franchise will put you through the ringer.

- Sebastiano

DO YOUR RESEARCH

Find a good fit for your personality.
Talk to other franchise owners before buying. Experience the product. Sit in a store.

- Sebastiano

BE FOREWARNED

As the franchisors start to hurt, it’s possible they will reduce franchisee support staff.

- Bill Reicherter

The  economy has caused many franchisors to cut back. Ask what is happening to the advertising budget. Understand how the lack of advertising will impact your business.

- Zarco

THE MIAMI HERALD