A Closer LookAn expert reveals the secrets to investigating a franchise.
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There are two faces of franchising. One face offers theglittering smile of enormous financial rewards and conjures upvisions of Ray Kroc (McDonald's) and Colonel Sanders (KFC) andthe thousands of millionaires they've helped into business.These pioneers made franchising a household term with their motto:"Get in early, build multiple stores fast and make amillion."
The other face is the darker side of the franchising story. Theearly years of franchising growth culminated in a "60Minutes" TV report titled "From Burgers toBankruptcy," which aired in December 1978. The show told thestory of a couple of slick guys in rented Rolls-Royce automobilesand gaudy jewelry who sold the empty promise of phony fast-foodsuccess on the strength of their outrageous claims of instantwealth. The motto of this face of franchising: "Fast-buckartists selling hot air on the promise of success."
Understanding the dual nature of franchising is an essentialstep in the task of finding the right investment for your interestsand resources. Go to a franchise trade show, and notice the pace ofthe sale. It's fast. It's a hard sell. And, all too often,it is accompanied by exaggerated claims of earnings potential. Theother face of franchising can be difficult to uncover, but there isgood news: The law is on your side, and you will be prepared forthe process if you do your homework and bring diligence to yourtask.
