Business in a Box - Is Franchising Risk Worth the Potential Payoff?

January 16, 2006

Frustrated middle managers, executives looking for a career change and blue-collar workers seeking financial independence alike are enticed by the idea of starting their own enterprise by purchasing a franchise. Notwithstanding the persuasive glossy brochures supplied by the franchisors, purchasing a franchise is a risky endeavor. However, with the proper due diligence and professional advice, owning a franchise may prove profitable and enhance one’s quality of life.

Collectively, franchising is an economic giant. In the United States alone, nearly $1 trillion dollars a year in sales is accrued at franchised stores. Despite the massive overall numbers, the median size of a franchise operation is approximately 25 units. Moreover, fewer than 20 companies have franchised as many as 5,000 units. And, powerful brands like McDonald’s stores carry hefty price tags.

According to Griffith University, the overall average price one can expect to pay for a new franchise territory is...

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by: Todd C. Ratner, Esquire

BusinessWest

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