1. Get experienced support
Although your franchise agreement might include the rights to a particular geographic region, there are often umpteen potential sites. From strip malls to highway frontage, it's important to identify the best environment for your fledgling business to succeed. That analysis requires an experienced franchisor with a team that has studied the best environments for the franchise's success, and that works with experienced real estate brokers or a commercial broker network, Seid says.

"The franchisor is the one who defines the type of location, size of location, the tenants nearby, the traffic conditions and the cost," he says. "If I'm a potential franchisee, one of the first things I should be asking is, ‘How do you determine what type of location I'm going into and who is supporting me in getting there?'"

Doug Walker, a LaVida Massage franchisee in Tampa, Fla., found the parent company was exceptionally involved in the location selection and design. LaVida's franchise plan has distinct preferences about location, says company founder and CEO John Hoose. A typical location is approximately 2,400 square feet and located in a strip mall or other area with high levels of foot traffic and other consumer-oriented businesses, including a grocery store anchoring the complex.

Hoose says his company works with a large network of commercial real estate brokers to help franchisees find the best location in their areas. Once a location is found, floor plans are submitted to LaVida and, within 24 to 48 hours, the company produces sketches of the best possible space configurations for the franchise. Hoose says this process ensures the space is appropriate for a LaVida franchise and the landlord will be agreeable to the plans.

2. Analyze the area
A suitable building or shopping center is one part of the equation, but it's equally important to understand the area, including traffic patterns, demographics and even future building plans, Seid says.

Even if a location looks great on paper, it's important to inspect the traffic patterns around it. If it's too difficult to access, customers might not bother, he says.

Rick Franklin is no stranger to hunting for franchise sites. He and his wife own five Fantastic Sams hair salon locations--including one that's a Top 50 location--and plan to open a Jimmy John's Gourmet Sandwiches franchise in metro St. Louis, Mo. However, after building his first Fantastic Sams location, Franklin found that a new shopping center was being planned one mile away and included a hair salon.

"That really killed our first business," he says.

Since then, he found the contractor who handles the build-outs of his stores a great source of intelligence for new building projects. He also advises checking with the land use office of the municipality to find out about any new building projects--and the possible competition they might house.

Seid says having an understanding of an area's demographics is critical. His firm participated in a review of an ice cream franchise chain. He recalls one franchisee who was located in an Orthodox Jewish community but who didn't post signage that his ice cream was kosher--a very important consideration for many in the neighborhood.

"It was a market he didn't understand, so he couldn't work in that market," Seid says.

3. Sweat the lease details
While LaVida's Hoose gets involved with his franchisees right down to the details of lease and rent negotiation, other franchisors are not as aggressive when it comes to signing on the dotted line. Seid strongly recommends all franchisees retain legal counsel to review their leases to protect their best interests and ensure the lease allows for fulfillment of the franchise agreements, including space configuration, signage and other factors.

In Franklin's first lease negotiation, he didn't realize that signage on the property would incur extra charges. He left that out of the lease negotiation, and it ended up costing him more than he had planned.

There are other hidden charges. For example, Raymond W. Titus--CEO of United Franchise Group, the West Palm Beach, Fla.-based franchisor of sign franchise Signarama and embroidery franchise EmbroidMe--won't let franchisees lease space in a facility that requires "percentage rents," which set rents based on revenue. Titus also looks for potential problems, such as ensuring that facilities for his signage franchisees have enough power.

Franklin warns about common area maintenance (CAM) fees, which require tenants to contribute to the maintenance of common areas. These should be capped and allocated by square footage rented and not by occupancy levels, he warns.

But franchisors can use their muscle to find hidden concessions, too. Hoose and his brokers try to help franchisees look for "build-out money," where a landlord will fund a portion of the construction on the property in exchange for a specific lease period or other concessions. Since the economic downturn, he finds this money easier to negotiate and has helped franchisees secure as much as $40,000 to $50,000.

Even if your franchisor gives you exceptional support in each of these areas, it's important for franchisees to protect themselves, hire their own legal counsel and do their own due diligence, Seid says. Ensuring your interests are protected, while benefitting from an experienced and supportive franchisor and commercial real estate broker, gives you the best opportunity to find, negotiate and lease the best location.

By Gwen Moran, Entrepreneur

Not that the appetite for risk disappears at age 51, but most people starting a business at this point in their lives are in it for more than the adventure. Being your own boss is a satisfying concept. Control of your destiny is another. And you may have dreams of padding the retirement income and having a profit engine to pass on to your children.

For many dream chasers, opening a franchise may be a smart career move, allowing them to open a business and draw on the experience of those who have already run it.

Doug Schadle, the CEO of Rhino 7 Franchise Development Corp., a franchise consultancy in Apex, N.C., believes that the odds of failure for a franchise are low. "If you follow the system the franchisor has set up for you, you're probably going to make a lot more than by trusting the stock market," he says.

There are lots of glowing reports of franchise success, but statistics are undependable. It is still possible to fail, which Schadle readily acknowledges. "Even the best-designed business models will not always work for everyone," he says. "Buying a franchised business is a risk that will require real effort to be successful."

Local newspapers periodically report on lawsuits and squabbles between franchisees and their parent firms. UnhappyFranchisee.com posts gripes about scams and rip-offs. All of which is why nobody should make the decision to franchise lightly.

"There is a false expectation out there ... that all you have to do is turn the key, open the door to the business and the magic will happen," says Joel Libava, who runs a website called the Franchise King and advises people who are thinking of buying a franchise.

"The magic can happen — if you work really hard and choose the right opportunity," says Libava. "But there's no guarantee that just because there's a blueprint already in place, that you'll be successful."

So before you commit to a franchise, ask yourself three questions:

Is this business a good match for me?

Not every franchise is ideal for someone over 50. Issues of health and energy may arise.

Unless you're truly loaded, you're probably going to start out as an "owner-operator," meaning working long hours in a very hands-on way. There will be times when you're running a cash register, driving a truck, mopping a floor or doing whatever grunt work the business calls for.

At age 53, you may be up to going in at 4 a.m. because your manager didn't show. But is that something you'll want to be doing at 63, or 73?

Your goal will be to build your franchise business to a point where you're what's known as "owner-management": Your staff handles most of the details of running the show, leaving you free to tend to the big issues, as well as spend time with the grandkids or run off to Europe. It can take a long time to reach this goal.

So if you're looking at a franchise, don't forget to consider how the business might grow and evolve as your own life changes.

Is this an appropriate risk?

Always keep in mind that you'll be risking money from your retirement nest egg. If your franchise goes under and takes your money with it, will you have enough left to live comfortably?

A company that is just beginning to franchise itself is obviously more of a gamble than one celebrating its 40th anniversary. If you go with a relatively new company, you could be buying into a flawed business model that burns through your investment funds and leaves you on the street.

An existing franchise that has been operating successfully in a location for years will be much easier to run than one that you are opening yourself and doesn't yet have trusted and competent employees or a customer base. But an existing, successful franchise may also be more expensive.

Do I have enough money?

It's not uncommon to invest $50,000, $100,000 or much more when buying your own Subway, Great Clips, UPS Store, Ace Hardware or one of the thousands of other franchises out there. And you'll probably need extremely good credit as well. Not everyone gets to play in the franchise game. And if you do, choose well.

Here are five franchises that owners consider friendly for 50-plus.

Click here to read more.

By Geoff Williams, AARP

But when his parents convinced him that it was time to come home, Mr. Cho seized the chance to grow their dry-cleaning business into a commercial laundry company, Prestige Hospitality Services, which he expects to post $30 million in sales this year. It has four facilities—in Manhattan, the Bronx and New Jersey and on Long Island—and one is on the way in the Philadelphia area.

Entrepreneurship came easily for Mr. Cho, 29. Relying on the discipline and attention to detail he cultivated as a sergeant, he quickly grasped how to serve customers, prepare invoices and manage his 350-plus employees as they process 250,000 pounds of laundry daily.

“I don't walk around our plants with an M16,” Mr. Cho said. “But the basic qualities of determination and refusal to give up on problems, which the Marine Corps teaches you, are part of my job every day.”

Gravitating to opportunities
Entreprenuerial careers are attracting many veterans, locally and across the country. The U.S. Small Business Administration estimates that one in seven veterans is self-employed or owns a small business, and that vets are 50% more likely than the rest of the work force to become entrepreneurs.

The trend is attributable partly to a weak job market, but also owes to veterans' disposition and skills, which a stint in the military hones.

“A lot of people have good ideas, but they don't have the stomach for risk-taking,” said Ari Ginsberg, a professor of entrepreneurship at New York University's Stern School of Business. “Soldiers are steeled for this kind of experience.”

They also have the discipline to tough it out in New York City's competitive market. Consider Chris Cancialosi, who spent two years as an Army battalion operations officer in Iraq and as a Black Hawk helicopter pilot. He launched organizational consulting firm GothamCulture five years ago; it's on track to record over $1 million in sales this year.

“My experience in the Army gave me the confidence to make the leap into the unknown and the perseverance to be successful,” said Mr. Cancialosi, 36, whose 21 corporate clients include Footlocker, Google and JetBlue Airways.

Some servicemen and women learn that they prefer to accomplish their goals outside of the armed forces' “Yes, sir” culture. But it's not easy for every vet recovering from war to leap into business ownership.

In recent years, the government, nonprofits and private-sector enterprises have taken steps to support entrepreneurial veterans. The Entrepreneurship Bootcamp for Veterans with Disabilities offers training at seven universities nationwide, in partnership with the SBA. The “Buy Veteran” campaign, launched by the National Veteran-Owned Business Association last Veterans Day, connects Americans with the country's 3 million veteran-run businesses.

Program provides a boost
Jorege Quintana, 32, just took advantage of a 25% discount from VetFran—an International Franchise Association initiative that introduces vets to franchise opportunities—to buy a Smart Tax store in Queensbridge, Queens, for $40,000. Mr. Quintana expects $80,000 in sales this year.

After he got the keys to his shop in December, Mr. Quintana turned to a handful of buddies to help him gut the store and complete a renovation in two weeks. He credits his can-do attitude to his four years as a diesel-engine mechanic in the Marine Corps. His team once had to fix 379 vehicles and 129 trailers in two months to meet inspection standards.

“We worked 16-hour days and ate in the shop,” he recalled.

By Diane Hess, crain's new york business.com

“Typically during a recession the franchise sector of the economy has done pretty well,” says Joe Sheyka, a partner in the Chicago office of law firm DLA Piper LLP and chairman of the Illinois Bar Assn.'s franchise and distribution committee.

This recession has proved different.

In Illinois, where franchisers must register with the state, 309 companies filed registrations in 2010, down 13% from 355 in 2007, according to data from the Illinois attorney general's office. There was a similar decline nationally, according to data from the International Franchising Assn. in Washington, D.C.

But there are signs that a turnaround is beginning.

The IFA report projects that the number of franchise businesses will rise this year to 784,802, a 2.5% increase. “We see a glimmer of hope for the franchising business. It's a very resilient industry,” says Stephen Caldeira, IFA president and CEO.

Even so, there are pressures that will limit franchise growth. Mr. Caldeira says the greatest challenge is a dearth of loans to fund new businesses. He cites another IFA study finding that 87% of franchisers and 55% of franchisees reported that lack of credit undercut their ability to expand.

“Access to credit needs to improve for our industry to improve,” he says.

It's a view shared by DLA Piper's Mr. Sheyka, who has about 30 franchisers as active clients. “In the past, financing has been fairly available, but locations have been hard to find because of competition for those locations,” he says. “Now, because a lot of businesses have closed or shrunk their operations, you've got locations available, but companies have experienced difficulty getting financing.”

By Kevin McKeough, Chicago Business

Subway has surpassed McDonald's to become the world's largest restaurant chain in terms of units, the sandwich company confirmed Monday.

Subway had 33,749 restaurants around the globe at the end of 2010, said company spokesman Les Winograd. McDonald's had 32,737 at year end, according to a February regulatory filing from the burger giant.

"Last year was actually pretty average for us, growth-wise," Winograd said. "We aim to open between 1,000 and 2,000 locations globally each year."

A McDonald's (MCD, Fortune 500) spokeswoman said in a prepared statement that her company "continues to be focused on our business, and serving our customers. Our business continues to be strong and we are growing by being better, not just bigger."

As of Monday, Subway has 34,218 locations globally -- all of which are owned by franchisees.

About half of the company's unit growth is overseas, Winograd said. Subway now has more than 1,000 locations in Asia, and it just opened its first store in Vietnam. Other high-growth nations include Brazil, Mexico, India, China, Russia and France.

"A lot of our growth has been in non-traditional spaces that our competitors might not touch," Winograd said. "We have really unique ones, like on a riverboat in Germany, a church in Buffalo, car dealers, bowling alleys and casinos. We're not just in strip malls."

Fast food as a whole has gotten a boost from the recession -- even in unexpected demographics. Last month, an American Express survey showed quick service restaurants saw a bigger rise in spending by ultra-affluent consumers than any other restaurant type last year.

"It's a feeling of accomplishment, for sure," Winograd said. "But we didn't set out to surpass anyone in particular."

By Julianne Pepitone, CNNMoney.com

However, it is important for potential franchisees to conduct in depth research prior to purchasing a franchise.  Where there is money to be made, there will be people who seek to exploit people motivated to achieve economic success.  Franchising is being pitched aggressively to military personnel.  Many franchises have veteran outreach programs.  This is good because many military personnel have the drive, motivation, and leadership traits to succeed as franchisees but it important to conduct an appropriate market analysis.  Career transitioning or unemployed individuals should guard against letting emotional decisions override rational thinking.   Franchises are a big investment and many deliver economic prosperity for the franchisee but some deliver economic failure and disgust. The 2009 Entrepreneur magazine, “How to Research a Franchise,” by Carol Tice emphasizes the importance of doing your homework in making a decision to become a franchisee.

The International Franchise Association (IFA) was established in 1960 to build and maintain a favorable economic regulatory climate for franchising.  This is why the International Franchise Association (IFA) website should be a first stop for individuals considering purchasing a franchise.  Recommend starting off by reading (IFA) responses to franchising frequently asked questions and reading their “An Introduction to Franchising” document.

Franchising is a proven business model that can work but, there are few fail safe business ventures. To maximize the potential for success in franchising resources are available to conduct the appropriate market analysis.  Similar to investing in real estate, the difference between profit and loss may be location.   Also, few businesses will deliver a quick profit.  Franchises take time to develop into profitable business ventures and potential franchisees must have capital to fund the business and to cover personal expenses during the initial stages.  Also, individual characteristics of the franchisee are critical factors in the success or failure of the franchise.  Although, the franchise comes with a proven business mode, the franchisee must have management, motivation, leadership, business and entrepreneur skills.

By Shelton Rhodes, examiner.com

For that reason, franchisors need to alter their approach to helping franchisees secure startup funding and the capital they need to update and expand their businesses, explained Feldman and his fellow Panel of the Pros panelists.

Cooperation has always been a key element of successful franchisor-franchisee relationships, but with new challenges to accessing credit that collaboration is “more important now than ever,” said Grant Benson, Dunkin’ Brands vice president of franchising and market planning.

For that cooperation to be the most effective, the franchisor has to be strong, has to have a good story to tell and has to be able to tell that story well, said Benson. The franchisor also must make sure its franchisee candidates are well-vetted and have a good chance of getting funding. “We’re doing more work to shepherd candidates through the process, so we want to make sure they’re good candidates from the start.”

Another important step franchisors can take to help their franchisees secure funding is to help educate bankers about their company and franchising in general, said FASTSIGNS International CEO Catherine Monson. “Community banks don’t know anything about franchising … you need to educate them and help them understand.”

FASTSIGNS took the extra time and expense of getting a bank-credit report — a third-party analysis of their brand and how it supports its franchisees, said Monson. It provides that report to banks where prospective franchisees are applying for loans to help demonstrate the brand’s value and that it is a solid investment. “We need to be talking one-on-one with the bankers and telling them how we support our franchisees and how we screen potential franchisees before they even get to the point of applying for a loan.”

FASTSIGNS is also “encouraging our franchisees to develop real relationships with their bankers,” Monson explained,  to take the bankers to lunch, show them their financials and talk to them about how business is going. That relationship may make the little bit of difference needed when it comes time to try to get an expansion loan one day.

By Brooke Howell, SmartBlog on Restaurants

But such outcomes needn’t occur. When franchisees and franchisors communicate clearly, consistently and work toward goals that benefit both, disagreements are manageable and sometimes meaningful.

“When conflicts arise, people on both sides have to put their egos aside,” said Frank Barnard, southeast operating partner for Dallas-based Genghis Grill. “Good franchisors know they don’t have all the answers … and a good franchisee—even if he’s grown to 100 units—can’t let his ego get in the way of rationality. It takes compromise.”

While disputes between franchise partners arise from myriad reasons such as egregious markups on food sales or encroachment issues, operators most often pointed to poor communication as a common root cause.

Here are four ways operators can mitigate miscommunication risks that protect both the franchisor and the franchisee.

1. Over-communicate rather than under-communicate. “If you share information franchisees can use to help or protect their businesses, then it’s always good. But even if it’s too much, I’d rather be accused of saying too much than too little,” said Craig Dunaway, president of 225-unit Penn Station East Coast Subs.

“They become disengaged when they feel they don’t have all the facts,” Dunaway said, whose company is based in Cincinnati. He said sharing useful information about ingredient prices, operational procedures and marketing ideas is always valuable, even if it’s overstated. “I’d much rather have them say, ‘Why are you telling me this?’ instead of, ‘Why didn’t you tell me this?’ That doesn’t mean you’ll eliminate problems, but it definitely minimizes the opportunity for problems.”

At Penn Station’s annual franchisee meeting held in February, Dunaway and CEO Jeff Osterfeld held a session in which “we basically put bull’s-eyes on our chests and let the franchisees tell us what they’re thinking,” Dunaway said. During its Franchisee Forum, Dunaway held up a blank sheet of paper and said to the gathering, “‘Here’s our agenda: nothing. You now have the chance to question me and Jeff about what we’ve done in the past and what we’re doing.’”

Dunaway said that of the 25 significant changes made to the Penn Station system in 2010, 21 came from franchisees. “That’s pretty convincing proof that their ideas are valuable to us.”

2. Include franchisees in the brand’s long-range planning. “When franchisees are involved, you increase buy-in and are less likely to get into debates,” said Aziz Hashim, a 40-unit franchisee of Checker’s, Rally’s, Subway and Popeyes Louisiana Kitchen concepts.

“What’s really useful to me is multi-year planning and forecasting,” Hashim said, whose company is based in Atlanta. He cited Popeyes’ CEO Cheryl Bachelder as a prime example of a leader constantly talking about that brand’s future goals. “Franchisors need to let franchisees know what direction the company’s going to take next year, the year after that and five years later. Knowing what’s coming can promote buy-in with franchisees or give them the chance to get out if they don’t like it.”

Ideally, Hashim said, direction for a brand’s future evolves from shared information, not just directives from on high. He said he’s partnered with brands whose leadership dictated their vision without asking franchisee approval.

“Some brands claim to listen to operators, but in reality they don’t value their opinions that much,” he said. “They’re doing the bare minimum, giving token communication to let you think they’re listening to you.”

3. Develop mutual trust through franchise advisory committees. Such groups not only represent operators’ interests effectively, they serve crucial roles in disseminating corporate policy to franchisees.

In a 100-percent franchised system like Straw Hat Pizza, franchisee opinions can carry unusually heavy weight. The 78-store chain’s president, Jonathan Fornaci, said he likes the full-franchise arrangement because “it shows our franchisees we’re not competing against them, that we’re focused on their profitability.”

4. Be flexible about marketing practices. By having operators as the company’s most knowledgeable field representatives the Walnut Creek, Calif.-chain can be unusually flexible with their operators marketing needs. For example, 2 percent of the mandated 3 percent marketing fee is returned to each operator, allowing them to tailor marketing strategies specifically for their unique customers.

“In some parts of California, local advertising is mostly in Spanish, so how can you run a campaign in English in that community?” said Fornaci. “So not only do we allow them to do radio ads in Spanish rather than TV ads in English, we’ll even do customized media for them.”

5. Each party has different goals, so be willing to compromise. “Each group’s interests aren’t always aligned, so people have to put their egos aside and work toward a balance. It’s not hard to come up with the right answer, but it takes work,” Hashim said.

Genghis Grill’s Barnard said since the company maintains a high number of corporate stores (the chain is 55 percent franchised) that helps to to set a clear standard for franchisees and educates concept executives about diverse markets.

“The owners of the concept were actually franchisees of Genghis Grill before they bought the company, so they know how to run stores well,” said Barnard. When there are too many franchised stores, he added, “the tail can wag the dog and the whole thing gets out of balance. But when owners are involved like they are, they really understand the whole situation. That makes great a partnership.”

By Steve Coomes, Fast Casual.com 

As more baby boomers look for ways to strike out on their own or supplement income in retirement, a surprising number are turning to franchises. At the West Coast Franchise Expo in November, 27% of attendees were 51 or older, up from 22.5% in 2008; at a different event on the East Coast in April, the percentage of 50-plus attendees jump from 21.5% to 24%, says Jim Mastandrea, the show director for MFV Expositions, which produces franchise expo events. And they're not just browsing. Last year, Decorating Den, an interior design franchise, said the percentage of franchise owners who were over 50 hit 35%, up from 32% in 2009. At Caring Transitions, an estate sale and moving firm, about 35% of current franchise owners are between 55 and 60. And in 2010, a sample of Great Clips hair salons showed that its franchise owners over 50 had increased more than 15% in the last year.

The boom in franchise ownership dovetails with other employment trends for Baby Boomers. They're working longer, either because they want to or have to, and many want out of the traditional work force – or haven't been able to stay in it due to recent downsizing, says Rob Bond, president of the World Franchising Network. Older Americans are also more qualified to own franchises: They're wealthier and have better credit -- people ages 50-59 had an average credit score 43 points higher than people in their 30s, according to Experian – and many want to employ their kids or pass the business along to them. And franchises, which are like a business-in-a-box, can often appear less risky than a from-scratch sole proprietorship, says Alisa Harrison, a spokeswoman for the International Franchise Association.

In fact, many experts say franchises are less risky. Whereas about 30% of small businesses fail within the first five years, according to the Small Business Administration, franchises are slightly less likely to do so, industry experts say. They come with an established brand name, a pre-designed business structure and strategy, as well as support from the franchisor. That's what Weirmanski liked: The corporate structure and franchisee support were among the benefits for the Batteries Plus endeavor.

But in spite of the predetermined business model and structure, there's nothing easy about owning a franchise. Just like starting a business from scratch, it takes a ton of energy -- 12 to 14-hour days are common, and soliciting new clients can require a lot of running around, says independent franchise consultant Joel Libava, founder of The Franchise King website. It's probably not the laid-back second career some boomers want.

Click here to read more.
By Catey Hill, Smart Money