Home Based Franchises.......how to choose the right one for you. Before reading about home based franchises let's deal with the basics. If you are not exactly sure what a franchise is, go to the following link What is a Franchise? FRANCHISE CONTRACTS In order to buy one of the many home based franchises on offer, it is necessary to sign a contract drawn up by the franchising company. These documents typically give the franchising company sweeping rights whilst restricting your rights as far as possible. Please go to the Franchise Contracts for some useful information on this topic.
FRANCHISE MYTHS - THE NUMBERS The franchise companies, the franchise associations and the websites that advertise franchises want people to buy franchises (no surprises there). Some of them want you to buy a franchise so much that they become a bit selective with the truth. I have seen figures quoted on websites such as - "95% of franchised businesses succeed but 75% of other start up businesses fail within the first year or two". THIS IS NOT TRUE and sites quoting such outrageous figures never quote any sources for them. The International Franchise association has warned its members not to state that a franchised business is any more likely to succeed than any other small business. The US Small Business Administration states that "over 50% of small businesses are no longer in business after 5 years" (they do not provide any split for home based franchises and other small businesses). So comparative figures are a mystery. The only bodies who do have solid information on this are the banks and they are not inclined to share what they know on the subject.Although this information is not related specifically to small or home based franchises, the figures published by the US Small Business Administration on the failures to repay loans lent by them to franchisees, is interesting and can be found on this link SBA Loan Statistics
WHAT YOU ARE PAYING FOR When you buy a franchise, you are generally paying for:The right to use the brand will probably be a major part of the franchise price. You should consider whether the 'name' is worth the price you are paying particularly if the brand is not well known in the area that you will operate.
GETTING USEFUL INFORMATION ABOUT FRANCHISES Getting accurate and useful online information about home based franchises (or any other kind) is very difficult. Almost all websites on this subject are merely advertising vehicles whose owners are being paid by the franchising companies to attract prospects. DON'T TRUST THEM to provide truthful advice. If you want general information about how to assess a franchise, there are plenty of books available from e.g. Amazon. You would be wise to buy one as a first step. If you want an honest review of a particular franchise, then the only way you are going to get it is to pay for it (as usual nothing in this world is free). But even if you pay, you need to be careful. If you find a site where you have to pay for a survey BUT the site also has contact/further information links to franchise companies then WATCH OUT. They are asking you to pay AND they are receiving commissions from the companies. The only truly independent review site that I have managed to find (after much searching) is Business Opportunities Watch There must be others and I will continue searching and add any that I find to the site.
HOME BASED BUSINESS FRANCHISES AVAILABLE The most popular of small franchises fall under the following headings:
franchise scams
There are many other types but this covers the main areas.
CAN YOU 'DO IT YOURSELF'? If you find a home based franchise business that interests you. The first question you should ask yourself is "Can I set up my own business doing this without buying the franchise". Remember that you will be paying a (possibly) substantial franchise fee and probably regular 'royalty' payments. If you saved this outlay you could spend it on set up costs and any training you might need and you would not be bound by a contract as to territory etc. You could use franchise research just to identify a business you could set up independently. THE RECESSIONThe recession complicates the search for a home based business franchise. Many of the most popular types of home base franchises are clearly going to suffer in present financial conditions. What worked even last year may not be working now. Take a look at this link for some futher information Recession Proof BusinessesWHAT NEXT? A recent survey of franchisees has established that around 50% of franchisees regret their decision to buy their franchise. The reasons for regret were usually that the franchise was a 'bad fit' or that the profits were substantially less than they had expected. Now - that does mean that 50% did NOT regret their decision and so there are some happy franchisees out there. The unhappy ones did not do their research - DON'T MAKE THAT MISTAKE.Take a look at the Good Franchises link for some tips on how to identify the better 'prospects'. WHY SMALL BUSINESSES FAIL Take a look at the following link which has some useful information that applies to small home based franchises as much as any other type of business Why Small Businesses FailReturn from Home Based Franchises to Home Page
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