Friday, May 10

Are you considering a franchise? Be careful when

| By Liz Weston, MSN Money

Ready concepts make it easy, start your own business, but you can easily lose your shirt. And many rub under the rules and restrictions.

Mary Pelach had a pretty good idea of the risks if they their first batteries plus franchise in Sioux Falls, S.D.. 20 years, ago $175,000 invested. She and her husband, Gary, used savings and money from his mother, a loan of $100,000 small business administration gifted.

"Their only shake hands when you log on document after document," recalls Mary Pelach. "It is getting worse than a mortgage."

Buying a franchise means buying a concept together with training, marketing support and often delivers. Start instead of forward, franchisees get a head-start. Some people make a decent living. Some get even rich.

Then again, many people fail.

Those who come to buy into an idea, the lousy on the shorter or is dated. They are paralyzed by corporate policies, over which they have no control. Rather than become rich, they lose their investment and then some. Some failed franchise owners have even by the companies, the it business for "Penalties"-a percentage of revenue, which they should be sold to earn, sued have been but not.

"People lose their money, they lose their homes," franchise marketer Sean Kelly, a former marketing Director said the aunt Anne pretzel chain, FranBest and unhappy franchisee websites published. "It was that franchises are a safe route in the business, and it is simply not true this myth...."

Mary Pelach was 41 and ready to leave a corporate telecommunications job, after her Department through three brutal rounds of layoffs. If it was a job to keep this uncertain, she would might be better employed.

Liz Weston

But she wanted to go alone. She liked offer "reinventing the wheel" and support the idea of someone else.

The pair explores different franchise options quickly to avoid fast food. "You have to throw your inventory every 11 or 12 minutes!" Perlach said. She liked the idea of a one-stop shop for batteries, but Gary, then to a 47 year old aircraft pilot, initially rejected the idea.

"My husband thought it was absolute hooey," reminded Mary. "I said, ' think for a minute: how many battery-powered equipment we have in our home?'"

The couple have made the leap. Gary worked as a pilot, while Mary set up and ran the business. She could even a salary to be paid within six months.

Two decades later, the couple has four battery plus stores in two States, and Gary has been withdrawn. Her son and daughter-in-law work with Mary, to learn the business. You assume will be when Mary is ready to retire.

"run it," said Mary. "We continue a cheque for him to pull."

Franchise works Mary good for them, but warned that the model would be a good fit for someone that wants to call all the shots. They must be entrepreneurial enough to take the risk, she said but not so free-spirited, that would rub under many limitations of the franchisor.

"Make sure that a franchise is what you want," said Mary. "With a franchise have you their rules and processes to follow."

10% Of all employer firms make issued franchise one according to the Census Bureau, 7.9 million employees and accounting of every six dollars, to a company.

The possibilities go far beyond fast-food outlets, gas stations and convenience stores. Franchisee offer massages, dog poo scoop, check for bugs, sex toy sale, tutor children and clean houses a.

Investing in a franchise is not cheap. The initial total investment, franchise fee, costs, accessories and equipment, including usually leads $200,000 to $300,000, said Alisa Harrison, a spokeswoman for the International Franchise Association, a trade group. Creditworthy applicants can SBA loans, but franchisees are usually required for a piece of their own Kapitals--often 20% to 25% of the total amount needed help.

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