Want to own a business? Think franchise

Question: How would you define the concept of a franchised business and how can I learn more about franchise opportunities?

Answer: The word "franchise" comes from France . In the Middle Ages, a franchise was a privilege or right granted by the local nobility to hunt, hold markets or fairs, operate the local ferry, etc.

Today, a franchise is an investment in a long-term (five to 25 years or more) business license. The franchiser grants you a license to distribute goods and or services using their trademark, trade names and business systems. Indeed, the word "system" is the key concept in franchising.

The franchisee may receive assistance with site selection, personnel training, business set up, advertising and product supply. The franchiser will have manuals and training in place to teach the system to the new franchisee.

In essence, the franchisee is investing in a license that gives him access to someone else's expertise, experience and method of doing business. But a franchise is a special kind of business license because, during the term of the franchise, the franchiser has some control and should provide significant assistance.

The cost of a franchise includes several factors: First, there is an "initial franchise fee" usually in the $20,000 to $35,000 range. This is the price of admission and covers the license itself, the training, and other related franchiser costs.

Second, almost every franchiser charges an ongoing payment called a royalty. This amount is typically 5 percent to 7 percent of sales; however, there can be considerable variation.

Finally, franchisers can provide a number of ongoing support services to justify their royalties. Some of the services are group product discounts, access to national accounts, research and development for your product or services, ongoing training for you and your employees, one or two annual meetings and improvements to the business system.

Today, franchising is a highly regulated industry that can offer great opportunities to individuals who want to realize their dream of going into business for themselves. Because of strict regulations, a lot of very specific information is available to the prospective franchisee while they are investigating a franchise opportunity. It is this ability to learn a lot about your potential business through investigation and research that makes a franchise business attractive, especially to individuals who have not previously owned a business.

There are countless books, magazines, and Web sites devoted to franchising. Also, the International Franchise Association will hold its 45th annual Franchise Convention March 6-9 in Hollywood , Fla. The program offers training sessions, special events, and keynote speaker Rudy Giuliani, former mayor of New York City . For information, visit www.franchise.org or call 202-628-8000.