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Ask PINK's Franchise Expert
By Karen Spencer
Franchise industry expert Karen Spencer unlocks the mysteries of franchising – and answers questions.
Have questions about franchising? PINK franchise expert Karen Spencer has more than 20 years' experience in franchising industry.
E-mail Spencer at franchise@pinkmagazine.com and see your questions answered here and in PINK magazine.
I have owned a franchise and am currently thinking about how to start my own. Do I start with the SEC?
Debbie Ramsey, Business Owner
Karen: You will need to start by outlining your plan to franchise your concept. There are certain documents that you are required to have prior to franchising: a Uniform Franchise Offering Circular (UFOC) – for which you will need a franchise attorney – an operations manual, a training program and other systems. If you have a current operating unit, this can easily be put in place. If you do not, it is recommended that you open or operate a company location for at least a year to obtain "proof of concept." You can also find some general information at the International Franchise Association at franchise.org.
Does being an independent business owner make sense for me?
Karen: Many times, running a business on your own may not be right for you. Franchise companies often use such marketing slogans as "Be in business for yourself, not by yourself." While many companies offer support, you would ultimately be running your own company. Timing is also critical: Assess your life to determine if this makes sense at this time. Also consider funding: Do you have the financial ability to purchase a franchise?
How do I determine which industry is right for me?
Karen: There are approximately 75 industries in franchising – children's services, restaurants, printing, automotive. Pick an area that is of great interest to you – not necessarily your core competency. You may not like what you are currently doing, but may have passion for another type of business. The franchise should help you learn what you need to know to be successful in this new venture. For instance, if you have 10 years of experience in technology but hate it, don't buy a Geek Squad franchise. Like animals more than computers? Consider a doggie day care or animal grooming company.
How can I learn about franchising?
Karen: In addition to learning how to operate your specific business, it is important to learn all you can about franchising and the role small business plays in the United States. Also, there are certain laws surrounding franchises that that can affect how you purchase your business and the ongoing relationship that you will have with the brand. The International Franchise Association (IFA) is a great place to learn about the industry and to network with other franchisees.
How do I choose the best franchisor for me?
Karen: Making sure a franchisor is a strong company with great support systems is critical to the success of your business. Assessing each and every aspect of the company must be done before you purchase the franchise. Research – take your time – and lean on professional advisors! Talk to franchisees within the company and find out if they'd do it again. And try not to fall in love with a brand until you've done your research.
What is a UFOC?
Karen: Uniform Franchise Offering Circular, which franchise companies are required by law to give to each potential franchisee. Companies will either produce this to be signed at the first meeting with a potential franchisee or will send it to them in advance to be faxed back. Signing a UFOC does not mean you are agreeing to buy a franchise at this time; it is simply information about the brand for you to review. Consult an attorney about this document before signing any legal agreements.
About Karen Spencer:
Founder and CEO of Fran-Systems Worldwide, Inc., a franchise education and consulting company, Karen Spencer has more than 20 years of experience with all levels and types of franchise companies (including Arby's, Back Yard Burgers, Original Cookie Company and Jamba Juice). Spencer has written and published more than 100 franchise educational articles and programs and is currently on the Board of Trustees for the Educational Foundation with the International Franchise Association. She also serves as an Ambassador to Franchising for the IFA. Through the Small Business Association, she volunteers her time to conduct free classes on purchasing franchises, teaches franchising at many universities and has been an industry speaker for more than 10 years.
