Franchises: An Option for Business Owners with Disabilities

Franchises are quite popular and may be an option for business owners with disabilities. Mike Powers, author of How to Open a Franchise Business, says that about one-third of today's franchises are owned or co-owned by women and about one-tenth are minority owned. Franchising offers a good opportunity for potential business owners with disabilities--especially with careful planning, investigation, and an adequate financial base.

Benefits

In How to Open a Franchise Business, Mike Powers says that franchises have a greater chance of success than either purchased businesses or those started from scratch. Franchises offer a proven type of business, people patronize them because their products are recognized and trusted, and they have a larger customer base because of name recognition.

Many franchisors also provide training in starting, running, and marketing the business; training for updating the skills of franchise owners and employees; supply record keeping systems; and conduct advertising and marketing campaigns on behalf of all franchisees. Some sell supplies to franchisees at reduced costs, and some can finance or arrange financing for franchisees.

Drawbacks

As with everything, franchising has a downside. Franchises tend to require more research than starting a business from scratch because both the market and the franchise itself need to be evaluated. Generally, they are more expensive to open than other new business, typically requiring an investment of $20,000 or more. Many cost quite a bit more--in the $100,000 to $300,000 range.

The franchise owner answers to customers and to the franchisor and must operate his or her business according to the terms specified in the franchise agreement. This may mean that the business's location and exterior/interior design, product mix and prices, work attire, and advertising are under the franchisor's, not the franchisee's, control. The franchisee may be required to regularly file financial reports and be subject to inspection and audits. Also, the franchisee makes regular payments to the franchisor.

Development Steps

In a franchise arrangement, the franchisor and franchisee develop a binding agreement that is renewed periodically. There are many steps to take before this occurs and the business opens. Most are the same steps involved in opening a business from scratch and none should be bypassed. They include:

Research industries and types of franchise arrangements for those industries
Conduct a self-evaluation
Identify and evaluate possible franchisors and their franchise systems
Evaluate franchisor's products
Contact and visit other franchisees
Identify the market and evaluate its income potential
Identify opening and operational expenses and develop income projections

Because franchise agreements are written to protect the franchisor, the prospective franchisee should hire a lawyer with franchise expertise. The lawyer will explain and negotiate the franchise agreement and may recommend changes. He or she also can provide expertise on state and federal regulations, negotiate and develop leases, and deal with any other legal arrangements required for opening a business.

Hiring an accountant is also a good idea because the financial statements and reporting requirements for a franchise usually are more complex and rigorous than those for a from-scratch business. The accountant will prepare financial statements, evaluate business costs, and work with the franchisor's accounting system.

Resources

Here are some resources that provide detailed discussions and tips on franchising, the purpose of the franchise offering circular, and rules and regulations governing franchising. They also list questions to ask and answer while researching franchises, provide lists of franchise associations, and discuss the franchisor/franchisee relationship.

How to Open a Franchise Business, Mike Powers, Avon Books.

The Franchise Doctor | The Franchise Bible (has State Franchise Information Guidelines)

Entrepreneur Magazine | FranInfo

For more information on RTC: Rural's self-employment research, please visit our web page at http://rtc.ruralinstitute.umt.edu or contact:

Nancy Arnold, Research Director for Rural Employment and Economic Development
Research and Training Center on Disability in Rural Communities
The University of Montana Rural Institute: A Center for Excellence in
Disability Education, Research and Services, 52 Corbin Hall
Missoula, MT 59812-7056
406-243-2469 or 888-268-2743 | Email the Rural Institute

The opinions expressed in this document are those of the authors and do not necessarily represent the policy of the Department of Education, and you should not assume endorsement by the Federal government.

Questions? Would you like to receive periodic updates about our research and training activities? Do you have comments or suggestions about this site? E-mail your requests, comments and suggestions to Email Diana Spas or call 888-268-2743 and ask for the Information Coordinator.


	Franchises An Option for Business Owners with Disabilities
Franchises are quite popular and may be an option for business owners with disabilities. Mike Powers, author of How to Open a Franchise Business, says that about one-third of today's franchises are owned or co-owned by women and about one-tenth are minority owned. Franchising offers a good opportunity for potential business owners with disabilities--especially with careful planning, investigation, and an adequate financial base. Benefits In How to Open a Franchise Business, Mike Powers says that franchises have a greater chance of success than either purchased businesses or those started from scratch. Franchises offer a proven type of business, people patronize them because their products are recognized and trusted, and they have a larger customer base because of name recognition. Many franchisors also provide training in starting, running, and marketing the business; training for updating the skills of franchise owners and employees; supply record keeping systems; and conduct advertising and marketing campaigns on behalf of all franchisees. Some sell supplies to franchisees at reduced costs, and some can finance or arrange financing for franchisees. Drawbacks As with everything, franchising has a downside. Franchises tend to require more research than starting a business from scratch because both the market and the franchise itself need to be evaluated. Generally, they are more expensive to open than other new business, typically requiring an investment of $20,000 or more. Many cost quite a bit more--in the $100,000 to $300,000 range. The franchise owner answers to customers and to the franchisor and must operate his or her business according to the terms specified in the franchise agreement. This may mean that the business's location and exterior/interior design, product mix and prices, work attire, and advertising are under the franchisor's, not the franchisee's, control. The franchisee may be required to regularly file financial reports and be subject to inspection and audits. Also, the franchisee makes regular payments to the franchisor. Development Steps In a franchise arrangement, the franchisor and franchisee develop a binding agreement that is renewed periodically. There are many steps to take before this occurs and the business opens. Most are the same steps involved in opening a business from scratch and none should be bypassed. They include: Research industries and types of franchise arrangements for those industries Conduct a self-evaluation Identify and evaluate possible franchisors and their franchise systems Evaluate franchisor's products Contact and visit other franchisees Identify the market and evaluate its income potential Identify opening and operational expenses and develop income projections Because franchise agreements are written to protect the franchisor, the prospective franchisee should hire a lawyer with franchise expertise. The lawyer will explain and negotiate the franchise agreement and may recommend changes. He or she also can provide expertise on state and federal regulations, negotiate and develop leases, and deal with any other legal arrangements required for opening a business. Hiring an accountant is also a good idea because the financial statements and reporting requirements for a franchise usually are more complex and rigorous than those for a from-scratch business. The accountant will prepare financial statements, evaluate business costs, and work with the franchisor's accounting system. Resources Here are some resources that provide detailed discussions and tips on franchising, the purpose of the franchise offering circular, and rules and regulations governing franchising. They also list questions to ask and answer while researching franchises, provide lists of franchise associations, and discuss the franchisor/franchisee relationship. How to Open a Franchise Business, Mike Powers, Avon Books. The Franchise Doctor \| The Franchise Bible (has State Franchise Information Guidelines) Entrepreneur Magazine \| FranInfo For more information on RTC: Rural's self-employment research, please visit our web page at http://rtc.ruralinstitute.umt.edu or contact: Nancy Arnold, Research Director for Rural Employment and Economic Development Research and Training Center on Disability in Rural Communities The University of Montana Rural Institute: A Center for Excellence in Disability Education, Research and Services, 52 Corbin Hall Missoula, MT 59812-7056 406-243-2469 or 888-268-2743 \| Email the Rural Institute The opinions expressed in this document are those of the authors and do not necessarily represent the policy of the Department of Education, and you should not assume endorsement by the Federal government. Questions? Would you like to receive periodic updates about our research and training activities? Do you have comments or suggestions about this site? E-mail your requests, comments and suggestions to Email Diana Spas or call 888-268-2743 and ask for the Information Coordinator.