Do You Want to Own a Franchise?

For many Americans, being an entrepreneur and running your own business is the only way to go-being your own boss and creating your own profit flow. There are many reasons to franchise, and many questions to ask before you start. Does operating a franchise mean you have to have all the money you'll need before you start? Should you take on an existing business from owners who are retiring or moving on to other things? Will you have complete control of how the franchise business operates? Let's take a look at the ins and outs of business franchising to see if it's for you.

Suppose you want to open a Chili's. This restaurant specializing in Tex-Mex food is building a loyal customer base all over the country and you want to get in on the action. The requirements for buying a Chili's franchise vary, including how much start-up money you'll need. You'll need at least $150,000 of your own money (not borrowed) to qualify. And you should expect to cover opening costs that range from $430,000-$750,000 for rent, maintenance fees, equipment like deep fryers, bathroom supplies-everything you'll need for the Chili's to open. According to the rules of franchise business, 40 percent of the total cost of opening must come from your own funds, not bank loans.

You start by paying an initial franchise fee to Chili's of around $45,000. The rest of your start up money will be going to suppliers. You'll be expected to operate your franchise at one location for a certain period of time. Then you'll take part in a strict training program lasting. Over nine months you'll learn the details of running the business: inventory control, quality control, service, protocol, and more. You learn that you must follow the design specifications for the restaurant's décor, including logos, colors, labels, symbols, and insignia.

Once you've completed your training, Chili's provides a restaurant with a completed exterior. You'll be completing the interior, including fully equipping the kitchen, arranging the seating, and planning the restaurant's layout. The company provides field consultants to help you and to make sure you're following the details of the rules. You'' pay Chili's a percentage of monthly sales along with rent (either a flat amount or an additional percentage of sales). Naturally, some locations will be more profitable than others, but your own talent for business and running the franchise will also affect your profit margin.

Franchising boils down to buying not just a business, but its business strategy and identity. You'll be a partner with a business that has developed a successful philosophy for marketing and operations. Using their time-tested procedures and established brand, you'll have a greater chance of success. So does running a franchise mean you are your own boss? Well, only partly. You own the assets you used to jump start the business. And your hard work will help make it successful.