A Guide to Franchising - Black Enterprise

A Guide to Franchising

Confident businessman holding piggy bankCharnita and Angela Brock have been operating a Rita’s Italian Ice franchise for more than three years. But you won’t find either just sitting behind the desk pushing papers. With two Washington, D.C. locations, Charnita frequently works the window, dishing out the flavored slush that has become a summertime treat for many people, while Angela can often be found in the back of the store making the ice.

Charnita, 40, and Angela, 50, became franchisees in 2004 after paying a $25,000 franchisee fee and spending $350,000 in start-up costs to build the first store, purchase equipment and inventory, and create a stream of working capital. Theirs became the first Rita’s to open in the Washington D.C. metropolitan area. Last year the business had $420,000 in revenue. Having enjoyed sweet success with the first location, the two opened a second store in 2007. This year they project revenue for both stores to reach $450,000.

“We purchased a franchise because we like the fact that their methods are tried and proven, and it gives you a roadmap to follow to success instead of you trying to figure it out yourself.” Charnita says. “But what made me interested in specifically opening a Rita’s was the product. Once I tasted it, I was hooked,” Angela adds.

According to the International Franchise Association (IFA), there are more than 900,000 franchised businesses representing 85 different industries, including business and personal services, food, travel, and real estate. A 2008 study conducted by PricewaterhouseCoopers reports franchises generate $2.3 trillion. Franchising is big business, but operating a unit is neither easy nor for the faint of heart.

“We’re open seven days a week from 11 in the morning until 10 o’clock at night, so it’s hard work,” Charnita says. “One of the first things I ask people who say they’re going to open up a Rita’s is if they are going to work the store, because it’s not something that you treat as an investment and just hand it over to someone else. You have to work it,” she says.

Unlike independent start-ups, franchises afford you a proven brand and system, access to training and marketing, and overall support from the franchisor. But successfully navigating the industry takes energy, time, and money. Here are some steps you should follow when buying into the system:

Determine if you’re franchise material. Although the IFA reports that more than 7 million people earn a paycheck from a franchised business, franchising is not one size fits all. Take some personal inventory to determine if franchising is right for you. Are you willing to work in an environment that sees little change? Franchises are structured systems with uniform procedures, so there’s little room for creativity. Are you capable of working a non-traditional work schedule? Depending on the franchise, you may have to work seven days a week and some holidays. Are you a hands-on person or do you prefer to