Franchises make sense in this economy

Laura Raines, for the AJC

With the unemployment rate rising, corporate hiring stalled and 12,000 soldiers returning from Iraq, “it’s ugly out there in the job market,” sums up Rick Bowman, founder of Imprint in Time, LLC, a hands-on marketing and advertising business in Jasper.

Dora Gardo and Dora Gardo bought the franchise Imprint in Time in Jasper, Ga. The company specializes in computer signage, printing, trophy making, reprographics, etc. Photo by Leita Cowart, for the AJC.

Dora Gardo bought the franchise Imprint in Time in Jasper, Ga. The company specializes in computer signage, printing, trophy making, reprographics, etc. Photo by Leita Cowart, for the AJC.

After retiring from corporate life, he and his wife, Brenda, founded the company in 2005. It provides signage, imprinted garments, graphic services, engraving, blueprints and more. “It totally surprised us, how well the business did. Pickens County only has about 30,000 residents,” Bowman said.

“Providing everything under one roof turned out to be a very strong business model; when one part of the business slows down, another picks up. If we could be successful here, we figured someone could really run with it in a larger market.”

They began offering franchise opportunities last June.

“We’re seeing a lot of activity in the franchise market now,” said Leslie Kuban, the Georgia consultant for FranNet, a national franchise-brokerage firm. “There are many good reasons for choosing to start a franchise.”

Office space and furniture are less expensive in this economy. “Then there’s marketing clout. A good franchise can out market any independent business,” Kuban said.

“A franchise can also offer a strong, successful system to follow, so that you don’t have to invent everything yourself. And with systems in place, the road to profit is faster,” she said.

Almost every industry offers franchise opportunities: automotive, retail, travel, food, personal services and business services.

“Those that provide essential business and personal services are doing well. Cleaning services, mold removal, non-medical senior services and commercial signage aren’t glamorous, but they are steady,” according to Kuban, who has helped many middle and high-level managers find a good franchise fit this year.

There’s a huge span of choices, ranging from a $50,000 to $300,000 all-in investment [franchise fees, equipment, inventory and operating capital], but most fall in the $150,000 range.

“If a person’s only reason for seeking a franchise is that he can’t find a job, I discourage him. That’s not the right emotional state for starting a business. You have to want to own a business and believe that this is a better direction for you and your family,” said Kuban. In a recession, you need to do more due diligence to avoid these common mistakes.

Lack of personal analysis: “Many people choose a franchise because they are passionate about the product or services. They may want to help seniors, but do they have the marketing and management skills necessary?” asked Kuban.

You have to ask yourself if it’s a business you really want to do and can do, added Bowman. “Can you see yourself behind the counter? Does it fit your lifestyle and income expectations?”

Not doing the research: Franchises come in all shapes, sizes and prices. The opportunity has to fit your skill set, be affordable, and in a location where it can work. You’ll need to compare franchises, talk to current franchisees, as well as competitors. “Look closely at the value of the franchise. Are the business plan and marketing strategy clear? How much training and support will you get for your investment?” asked Bowman.

Lack of funding: “There’s not much investment capital out there for start-ups, right now, but many people choose to use home-equity loans or self-directed retirement plans. Companies like Bene Trends and FranFund can show you how to legally use your 401K to finance your business,” said Kuban.

Veterans should look at the Small Business Administration’s Patriot Express Loan Initiative, said Bowman. “Poor financial planning is the most common reason for new business failure.”

Not getting help: “You need to read closely the Federal Disclosure Document and franchise agreement before signing. Hiring a lawyer to spot problem areas can be well worth the money,” said Bowman. “Likewise, an accountant can save you thousands by knowing up-to-date tax codes and IRS rules.”

A good franchise broker can provide education, assessment tools and help you locate franchises that closely fit your criteria.

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