Shop 'Til You Drop
By Gina Petrone

Firstly, you'll need to know what exactly franchising is. Franchising is a method of doing business. It is a method of marketing a product and/or service which has been adopted and used in a wide variety of industries and businesses. The word "franchise" literally means to be free. In this sense, franchising offers people the freedom to own, manage and direct their own business. However, as with any freedom, there are responsibilities.

In franchising, these responsibilities have to do with the franchisee's commitments and obligations usually spelled out in a franchise agreement or contract to the franchisor. The franchisor is the one who owns the right to the name or trademark of the business. The franchisee is the one who purchases the right to use the trademark and system of business.

There are two different types of franchise arrangements:

• Product distribution arrangements in which the dealer is to some degree, but not entirely, identified with the manufacturer/supplier.
• Business format franchises in which there is a complete identification of the dealer with the buyer.

Business format franchises offer the franchise owner not only a trademark and logo but a complete system of doing business. Indeed, the word "system" is the key concept to franchising. A franchisee receives assistance with site selection of the business, personnel training, business set-up, advertising, and product supply. For these services the franchisee pays an upfront franchise fee and an ongoing royalty which enables the franchisor to provide training, research and development, and support for the entire business. In a nutshell, the franchisee purchases someone else's expertise, experience, and method of doing business.

Franchise owners like franchising because they can be in business for themselves but they're never left by themselves--the franchisor is always there to help. Franchisors like franchising because it is the best growth system every devised.

Sounds great? Now what? One of the best ways to investigate franchise opportunities is to visit a franchise show. Check with your city's convention center. Odds are that sometime within the next six months, a franchise show will be appearing.

Attending a franchise exposition allows you to view and compare a variety of franchise possibilities all under one roof. However, having a clear idea of what you want to accomplish and how to approach the franchise companies will save you time and money. After all, you'll pay to park, pay to get into the show, and give up a weekend day. Make the most of the opportunity by being prepared.

Keep in mind that exhibitors at the franchise show primarily want to sell their franchise systems. They're not there only to hand out free samples of their product. Some thoughts you should have before stopping at a particular booth are as follows:

1. Consider the amount you feel comfortable investing and the maximum amount you can afford. There's no sense in even stopping at the booths for franchises you know are out of your price range. Sometimes the franchise show brochure which lists all the exhibitors will give you an idea of the investment required so you can narrow your search.

2. Consider the industry that interests you before selecting a specific franchise system. Ask yourself the following questions:

• Have you considered working in that industry before?
• Can you see yourself engaged in that line of work for the next twenty years?
• Do you have the necessary background or skills?

If the industry does not appeal to you or you are not suited to work in that industry, do not allow an exhibitor to convince you otherwise. Spend your time focusing on those industries that offer a more realistic opportunity.

3. Take notes. It may be difficult to remember each franchise exhibit. Bring a pad and pen to take notes. Get promotional literature that you can review. Take the exhibitors' business cards so you can contact them later with any additional questions.

If you become interested in a particular franchise offering, get answers to the following questions:

• How long has the franchisor been in business?
• How many franchised outlets currently exist? Where are they located?
• How much is the initial franchise fee and any additional start-up costs? Are there any continuing royalty payments? How much?
• What management, technical and ongoing assistance does the franchisor offer?
• What controls does the franchisor impose?

Exhibitors may offer you prizes, free samples, or free dinners if you attend a promotional meeting later that day or over the next week to discuss the franchise in greater detail. Do not feel compelled to attend. Rather, consider these meetings as one way to acquire more information and to ask additional questions. Be prepared to walk away from any promotion if the franchise does not suit your needs.

Do not feel pressured to make any commitment. Legitimate franchisors expect you to comparison shop and to investigate their offering. A good deal today should be available tomorrow.

Do not sign any contract or make any payment until you have the opportunity to investigate the franchisor's offering thoroughly. The FTC's Franchise Rule requires the franchisor to provide you with a disclosure document containing important information about the franchise system. Study the disclosure document. Take time to speak with current and former franchisees about their experiences. Because investing in a franchise can entail a significant investment, you should have an attorney review the disclosure document and franchise contract and have an accountant review the company's financial disclosures.

Doing your homework before attending a franchise show will save you considerable time and money. The shows are a wonderful opportunity to explore and learn more about franchising but knowing what you will encounter and what to look for will help you make the best decision on whether or not franchising is for you.