Do your franchise homework

Nation's Business, Oct, 1988 by Meg Whittemore

Do Your Franchise Homework "I went into the wrong business when I bought my franchise," says Aaron Shingler, a former 7-Eleven franchisee. "That was not the franchisor's fault," he adds. "It was mine because I didn't do the research necessary to make a proper investment decision."

After owning the franchise for three years, Shingler decided to sell it back to Southland Corporation, the Dallas-based franchisor. He broke even on his investment, but he found that owning a franchise is harder work than he had expected.

"If prospective franchisees think this is an easy way to make money, they're wrong," he says. "It's a lot of hard work."

Today, Shingler operates Shingler-Hollis Franchise Investment Group, Ltd., in Landham, Md., with Barbara Hollis, who has a background in small-business development. "Our primary objective," Shingler says, "is to help franchisees not make the same mistakes that I made when deciding what type of business to go into." Their goal, he explains, is to help prospective franchisees "make more-intelligent investment decision."

Franchise consulting is a growing business, with consultants available throughout the country to help prospective franchisees and franchisors find the best investments.

But to the prospective franchisee, the question often remains: Do I need a franchise consultant? Consultants can be helpful if they are willing to walk you through every aspect of the franchising arrangement. Still, "there's no substitute for doing the research yourself," advises Jackie Clark.

Clark is president of A Choice Nanny, a computerized service for placing nannies. The firm, based in Columbia, Md., opened in 1985 and began franchising this past spring.

Even though there are numerous books, pamphlets and seminars on buying franchises, prospective franchisees often want to cut short their research.

"I see many entrepreneurs who don't take the time to read all the good information that's out there on franchising," says Susan Kezios, president of Women In Franchising (WIF), a Chicago-based educational consulting firm. "They tell me that it's too much trouble, and they don't want to be bothered."

Kezios, a former franchise broker, tells prospective franchisees to read all the available information and closely examine the franchise's financial statements. "I always counsel people to make sure that the franchise company is not bankrupt," she says.

A prospective franchisee should also hire a good franchise attorney before deciding whether to buy a franchise. Often, an attorney will recommend a franchise consultant if one is needed, but choose an attorney who is well-grounded in franchise law.

A good consultant and a good attorney should determine first if franchising is right for you. Drawing on his own experience, Shingler says: "I give my client an unvarnished look at what going into franchising is all about. I think the real problem is that people have unrealistic expectations about the amount of money they can make and the amount of work it actually takes to be successful."

Coleman Orr, president of Classic Care of America (CCOA), an exterior-window-washing franchise based in Alpharetta, Ga., looks for franchisees who are willing to make a total commitment to the business. "Franchisees interested in buying a CCOA franchise have similar traits," he says. "They are all hard workers, they know themselves, and they've done their homework on the business and on franchising."

Assessing your business and your personal strengths and weaknesses can be overlooked in the buying process. Yet those assessments are the most important elements in determining the kind of business to buy and whether you are too entrepreneurial to fit into a franchise system.

Knowing your business and your personal profile may save you a lot of time and money.

PHOTO : Former franchisee Aaron Shingler specializes in helping prospective buyers. Here he

PHOTO : advises Florine McCready, owner of Today's Temporaries in Towson, Md.