Quick, did you know that nearly half of the optical stores in the United States are affiliated with franchises? Or that there isn’t a single franchise company that sells luggage and leather goods?

Probably not. Actually, few knew until last fall, when the U.S. Census Bureau issued its first Economic Census Franchise Report. In 2007, when the Census Bureau surveyed 4.3 million businesses that have paid employees, its forms included questions about franchising for the first time. The results, which were released in September 2010, show that franchises account for 10.5 percent of all businesses and support 7.9 million workers in a work force of 59 million. Franchising sales account for nearly $1.3 trillion of $7.7 trillion in total sales.

The numbers came as no surprise to the International Franchise Association in Washington, D.C., says spokeswoman Alisa Harrison, because they closely match information gathered by accounting firm Pricewaterhouse-Coopers for the IFA’s annual Economic Impact of Franchising reports.

“What did surprise us,” Harrison says, “was that franchises appear in 295 different industries.”

Franchising dominates several obvious industries, such as fast-food restaurants (59 percent) and hotels (47 percent). But it is barely present in others, such as musical instruments and supplies (1 percent) and driving schools (.04 percent).

The report, Harrison says, “gives us better information to present to policymakers when lobbying for issues related to our franchise community.” It can also be a useful research tool for IFA members and for groups thinking of launching a franchised business. The IFA has allocated funds from its 2011 budget to hire a researcher to analyze the information and make it more user-friendly, she adds.

The Census Bureau conducts a business census every five years. The IFA is working with the bureau for the 2012 survey to include questions for businesses that do not have paid employees, such as sole proprietor accounting franchises. Owners of real estate franchises, Harrison says, might also fit into that category because their agents are independent contractors.

The first step in finding the right franchise system is to look inward–to determine what you really want from this investment and the qualities you seek in a franchisor that will help you attain the lifestyle you desire. This includes making a list of your goals and categorizing them into “wish to have” and “must have” lists.

The business may seem sexy, the products or services cool, the customers enjoyable, the business model resilient, and you fit in well. But if the franchise opportunity won’t deliver your desired results with a high degree of probability, it is the wrong franchise for you.

Below are six steps for researching and comparing franchise opportunities against their ability to deliver your “must have” and “wish to have” goals. The criteria you will use to compare and contrast businesses, regardless of whether they are in the same industry, are their ability to deliver your desired lifestyle.

Step 1: The Initial Interview
The first interview and presentation of the franchise concept is most likely conducted by telephone and sometimes in person with a franchise sales representative. This is a “getting to know each other” step, where you help the franchise sales representative understand who you are, what makes you successful, and what you are looking to accomplish. The franchise sales representative in turn helps you understand who the franchisor is, what makes the franchise opportunity unique and who makes a successful franchisee. You both begin the process of determining whether your skills and aptitudes match the skills and aptitudes required to succeed within the franchise.

Step 2: Qualification
At this stage, the franchisor will seek to gather and offer more specific details, including whether you have the financial capital to undertake this business opportunity. The purpose is to determine if there is a fit from the franchisor’s perspective. This interview may be conducted by telephone or in person, if the franchisor has a sales representative local to you. If you create an open and honest dialogue with the franchise rep, he or she will probably see the potential fit before you do because an insider’s perspective on what it takes to win in the system.

Step 3: FDD and Franchise Agreements Review
Most buyers at this phase conduct a business review of the terms and conditions of the FDD (Franchise Disclosure Document) and make sure you and the franchisor are in agreement on all major points. The FDD is a document the FTC mandates each franchisor to offer franchise candidates. Some states may require additional disclosure information in the FDD.

There are two ways to look at a FDD. The first is from a business perspective. Does the disclosure make sense? Can you live with the terms and commitments of the agreement? The second perspective is legal. You can bring the FDD to an attorney, though at this data-gathering stage, that might be premature and an unnecessary expensive. Once you have established the fit, then it will be time to conduct a legal review.

However, now is the time to become aware of what the business commitments look like and whether you are willing to honor those commitments. If for whatever reason there are commitments or obligations in the franchise agreement you can’t live with, end the process here. If you can honor these commitments with integrity, proceed to the next step.

Step 4: Franchisee Research
Once you’ve made it this far, now is time to interview franchisees, gather data, compare the information you receive from franchisees with what you received from the franchisor, and determine whether you will produce your desired results with a high degree of probability.

Ideally, this is a period of intense data gathering and heavy analysis. Here is where you test the veracity of the franchisor’s systems and determine whether the franchisor is skilled and has a profitable business model positioned for the long haul. If the franchise appears to produce your desired lifestyle with a high degree of probability, it’s time to invest in professional advice. You need to have a franchise attorney review your FDD and an accountant review your business plan.

Step 5: Visiting the Franchisor’s Home Office
Never do business with people you have not met. Franchising at its best is a highly personal relationship. You are entrusting your dreams and capital to the care of the franchisor leadership. Decisions made on the executive level have an impact on whether you’ll be able to meet your personal objectives. Go to the corporate offices, meet the decision makers, shake their hands, look them in the eye, and ask tough questions. You have already evaluated the business model against its ability to produce your desired results. Now it’s time to evaluate your trust level of the franchisor’s leadership and key management.

Step 6: The Yes/No Decision
It’s time to make up your mind about whether you design a new life and career of your choosing or to go back to the way it was.

Our Best of the Best franchises are determined by Entrepreneur’s annual Franchise 500 ranking, which takes into account objective, quantifiable measures of franchise success such as system size, growth and financial strength.

But greatness is about more than just numbers. So we asked three of the top franchise consultants around to tell us what it takes for a franchise company to be truly great.

Mark Siebert, CEO, iFranchise Group:
First and foremost, and it probably goes without saying, a great franchise must have a great concept.

 Second, great franchisors make the success of their franchisees their top priority. For example, Anne Beiler, former owner of Auntie Anne’s, once had a mall developer tell her he would give her an “A Location” only if she also took a “C Location” elsewhere. She took both, gave the “A Location” to the franchisee and kept the “C Location” for herself. A lot of franchisors would have done just the opposite, but she was committed to the success of her franchisees.

Finally, franchising is, first and foremost, a relationship business. The best franchisors are the best communicators.

Jeff Elgin, CEO, FranChoice Inc.:
A great franchisor has a strong brand that creates a clear picture in the minds of consumers, and takes whatever actions they can to continually reinforce and protect this brand.

Also, in today’s market, with financing options so limited, the great franchisors are doing everything in their power to keep their franchisees’ total investment low and to help franchisees reduce expenditures wherever possible.

Last but not least, great franchisors have the very best training programs to get franchisees up to speed rapidly, and they never stop supporting those franchisees throughout the life of their business.

Joel Libava, The Franchise King:
Great franchisors have an uncanny ability to select great franchisees. It’s not by chance, either. They get to know their current franchisees. They find out what makes them tick, and then find out how they become (and stay) successful.

On a similar note, great franchisors are usually pretty picky about who they award franchises to. The best companies that I work with have the courage to turn down franchise candidates they feel would turn out to be average franchisees at best.

And great franchisors are willing to invest in their systems. Franchisors can demonstrate true greatness by not being cheap when it comes to technology upgrades and marketing. Franchisees expect first-class systems; they need to feel that the money they’re paying into the system is more than worth it.

BY Tracy Stapp

Evaluate if Your Business is Ready
The first question to ask is whether your business is suited to being franchised. Beyond having a track record of sales and profitability at the existing business, there’s several factors to weigh here, says Mark Siebert, CEO of the national franchise-consulting firm iFranchise Group .

• Consider your concept.Most good franchise concepts, he says, offer something familiar, but with some unique twist to it. A good example is Florida-based Pizza Fusion which offers a familiar product–pizza–but with all-organic ingredients, delivered in hybrid-electric cars.

  The concept has to appeal both to end consumers and to prospective franchisees. There should be an expectation that more units will create economies of scale and increase profits. Additionally, the business needs to be something you can systematize and replicate, not something that needs your personal touch to be successful.

  “Ask youself, is the concept salable?” he says. “Can you clone it? Does it provide good returns?

• Check your financials. Most successful franchises take a business that’s already profitable and try to replicate that success in other locales. Cleveland-based franchise consultantJoel Libava says he likes to see companies with at least a couple of profitable units beyond the first one already in operation before a company tries franchising.

  “Is it just one great restaurant and mama’s wonderful pizza sauce?” Libava asks. “Or did you keep growing?”

• Gather market research. Don’t rely on your gut feeling that your business would be a smash hit across the country. Gather market research to confirm there is widespread consumer demand beyond your home city for what your franchise would offer, and room in the marketplace for a new competitor.
• Prepare for change. Becoming a franchisor means you’ll be engaged in entirely different activities than you were as a business owner. You’ll primarily be selling franchises and supporting franchisees now, instead of selling pizza or fixing toilets.

  “Ask yourself if you’re comfortable having a role as a teacher and salesperson, selling and supporting franchisees,” Siebert says, “as opposed to going out there and doing it yourself.”

  In addition, franchising your business will require that you relinquish some of the control you’ve had over how your concept is executed.

  “Franchisees won’t do it exactly the way you would, even if they do it well,” says IFA president Matthew Shay. “If you are so married to your concept that you won’t let anyone else touch it, then franchising may not be right for you.”

• Evaluate other alternatives. Before you plunge into franchising, you may want to consider other options, Siebert says. Depending on your situation slower growth, finding debt financingor taking on partners are all alternatives that may prove better ways to move forward.

  It also can cost $100,000 or more, so ask yourself if your company has the financial resources. Remember that while franchising allows you to grow fast, it also means giving up most of the franchise units’ future profits, Shay says.

Step Two: Learn the Legal Requirements
In order to legally sell franchises anywhere in the United States, your business must complete and successfully register a Franchise Disclosure Document with the Federal Trade Commission . In the FDD, you’ll be asked to provide a wide range of information about your business, including audited financial statements, an operating manual for franchisees, and descriptions of the management team’s business experience.

Beyond the federal FDD requirements, some states have their own rules for selling franchises within their borders. California and Illinois are generally regarded as having the most daunting registration process, says Libava. If you want to sell in one of these states, you’ll need to meet their requirements as well, at additional cost.

Franchisor Cindy Deuser, 51, co-founder of five-year-old franchisor Lillians Shoppes, says the rule binder her home state of Minnesota provided was two inches thick. It took the bargain-fashion-accessory company a full year and cost more than $100,000 to qualify in 45 of the 50 states, she reports.

“It took longer than we thought, and was very intense in terms of all the things you have to cover,” she says.

To advise and assist in this process, consultant Libava recommends hiring an experienced franchise consultant or franchise attorney. Often, a new company will be set up to act as the franchisor. Find an expert who can make sure you’re doing every required step correctly.

Step Three: Make Important Decisions About Your Model
As you prepare your legal paperwork, you’ll need to make many decisions about how you’ll operate as a franchisor. Key points include:

• The franchise fee and royalty percentage
• The term of your franchise agreement
• The size territory you will award each franchisee
• What geographic area you are willing to offer franchises within
• The type and length of training program you will offer
• Whether franchisees must buy products or equipment from your company
• The business experience and net worth franchisees need
• How you will market the franchises
• Whether you want an owner-operator for each unit or area/master franchisees who will develop multiple units

New franchisors don’t realize how much each of these decisions can affect their future profitability, says Siebert.

“If you’re thinking either 5 percent or 6 percent royalty, for instance, the difference doesn’t sound big,” he notes. “But five years later, when you have 100 franchises sold, and they each make $700,000 a year, that’s a $7 million annual mistake. And you’ve signed a 10-year contract.”

Lillians’ Deuser says she and her sister/partner Sue Olmscheid, 45, ran many business-model scenarios with their franchise attorney before settling on their $25,000 franchise fee, 7-1/2 percent royalty and 10-year contract term. They seem to have hit a winning formula–Lillians has grown to 32 shops in its first two years as a franchisor with its unique concept, in which stores are only open a few days a month.

Be careful to note whether geographic variables such as weather or local laws may affect franchisees’ success. Territory size is important too, as too-large territories may have to be bought back later at a premium so they can be split up, notes IFA’s Shay.

In the case of San Francisco Bay-area solar-panel installation franchisor Solar Universe, the company is selling franchises in concentric circles moving outward from its headquarters, mostly in warm-weather states with high electricity costs and generous state green-energy rebates, says founder Joe Bono, 36. Solar Universe has sold 14 territories since qualifying as a franchisor in January 2008.

Inadequate training can leave your franchisees ill-equipped to implement your system successfully. Solar Universe spent nearly $1 million preparing to franchise, Bono says, including $150,000 to create a state-of-the-art training center for franchisees complete with indoor roofs where they can practice installations.

Step Four: Create Needed Paperwork and Register as a Franchisor
Once you’ve made the important decisions that shape how your franchise will operate, you’re ready to complete your legal paperwork. When you submit it, be prepared for authorities to critique the document and possibly demand additional disclosures before they approve your application.

While the FTC essentially just files your FDD away, you’ll need to wait state approval. Bono reports Solar Universe waited several months to receive comments back from the state of California on its filing, and it took four months in all to get approved there.

Step Five: Make Key Hires
As you prepare to become a franchisor, you’ll usually need to add several staff members who will focus solely on helping franchisees. In the case of Solar Universe, the company sells its franchisees the solar panels they use, so founder Bono says he needed a full-time hire to staff the order desk. The company also hired a trainer and a full-time “franchise advocate” to answer franchisee questions and resolve any problems.

For its part, Lillians Shoppes hired a trainer, a creative director, a marketing assistant and a franchise-process manager who helped get franchisees using company software and systems, says CEO Deuser. Lillians now has a full-time staff of seven. The founding sisters still do all the buying for the growing chain, but Deuser says growth means they are already looking into hiring a second trainer.

Step Six: Sell Franchises
Now that you’re in business as a franchisor, one of your most pressing activities will be to find franchisees and convince them to buy your concept. Lillians is unusual in that the company has sold all its franchises by word of mouth and doesn’t have a sales representative. To help stimulate interest, the company offers a $1,000 referral fee to anyone who sends the company a new franchisee.

At Solar Universe, Bono says they’ve hired two in-house salespeople to handle franchise marketing. The company has also entered into a partnership with the national franchise-consulting chain FranNet, whose consultants may present the company to their prospects. Other common sales techniques include attending franchise fairs or hiring independent franchise marketing firms to help locate investors.

Selling franchises is difficult because of the high risk involved for franchisees, notes Siebert. Your salespeople should know your business well and be able to tell a compelling story about why you’re a worth the investment of their time and money.

Siebert boils down the issue this way: “You’re saying, ‘I want you to give me all your money. Then, quit your job, give up your security and benefits, and go into a business you’ve never been in before. And follow my rules.’ You’ll need to establish a pretty high level of trust.”

Step Seven: Support Franchisees
As a franchisor, you’ll have gone through a lot to reach this point. But here – at the point where you begin supporting your franchisee network – is where a chain ultimately succeeds or fails. Your training programs and other support efforts will create quality control, notes Siebert, making sure the brand provides a uniform experience no matter which unit customers visit. With the Internet, this has increasingly come to mean providing ongoing online learning modules for franchisees to use.

“If you’re a restaurant operator and employ 20 people in a unit,” he notes, “you have thousands of new employees going through the system every year. Without ongoing training, it’s pretty easy to institutionalize wrong behaviors.”

At the same time, you’ll need to start marketing the growing chain to drive sales to franchisees. Many new franchisors underestimate how much this marketing and support effort will cost, says consultant Libava. Marketing encompasses everything from radio or print ads to uniforms, logos, fliers, and logo art on company vans.

“Trust that you’re going to need a lot of money for marketing,” he says.

U.S. franchisors are taking steps to help franchisee’s secure funding.  According to an article in the Wall Street Journal, just one of the helpful ideas revolve around hiring executives dedicated to helping franchisees get a loan.

If you are interested in a franchise loan, start up franchise financing, or franchise funding, then you need to speak with FranchiseTiger.com (Diamond Financial Services, N.J.). The franchise loan consultant experts in start-up franchise financing. At Franchise Tiger we can quickly pre-quality you and discuss your leasing and funding options to help you start up your franchise business or expansion needs.

Our high success rate has benefitted many franchisees throughout the country.

What are the Benefits of Leasing?

• Conserve capital
• Save bank lines of credit
• Tax advantages
• 100% Financing
• No obsolete equipment
• Custom tailored to your needs

Financing is the Key to Success
Obtaining franchise financing may be the most difficult part of your new business venture. Whether your qualifications are average, strong or unique, we know how to present or structure, so you have the best chance for approval. Many lenders are particularly hesitant to fund start up franchises. We know how and where to get them financed. We get loans approved that other lenders turn down. You get the benefit of our Franchise expertise and business lender relationships.

We Maximize your Loan Potential
Studies have shown, for example, that in one year over 21 million small business loans were applied for through local banks and only 4 million were actually funded to start a business! Reason for failure varied. We realized that many capable individuals were not able to identify interested financial institutions, package the application or justify their needs to Bank officers. Over 84% were initially declined due to presentation alone. The experience and skill of the loan officer sometimes determined the potential success rates as much as the merits of the application itself!

We Offer the Total Solution
Our specialty is mainly SBA financing (Small Business Administration), lending programs that are guaranteed by SBA, but provided by conventional lenders. SBA programs are offered to almost anyone. Not all SBA lenders are the same, though. We have close relationships with only the most aggressive Business expansion lenders nationwide. We help you evaluate the possibility of buying a franchise, (pre-qualify me), assist you through the application process, professionally package your loan and work with you until loan approval and funding.

Reach your Goals and Dreams
Our success rate is high for we know what our business lenders want and need to get your loan financed. The best program is the one that provides you with adequate capital to succeed in your new venture. We pride ourselves in securing working capital whenever possible and to provide a complete package for all of your business and financial goals.

3 Reasons Why Now is an Ideal Time to Become a Franchise Owner

“By Jocelyn Chavez”

If you’re interested in pursuing franchise ownership, now is an ideal time to turn your aspirations into action. With the economy improving, the franchise industry is poised for substantial growth, and franchise businesses are expected to continue to flourish. According to the International Franchise Association’s (IFA’s) Franchise Business Economic Outlook: 2011 Report (prepared for the IFA Educational Foundation by PricewaterhouseCoopers [PwC]), the franchise industry is expected to make significant gains in 2011 and beyond.

So if you resolved to become your own boss, the IFA Franchise Economic Outlook: 2011 Report offers further proof, evidence and inspiration, that this is the time to accomplish your business ownership goals. Some of the projections for franchising activity growth featured in the IFA Franchise Economic Outlook: 2011 Report, include:

1. Job creation- Creating jobs is crucial to stimulating spending and overall economic growth, which is why economists and political leaders continually cite job creation as a top priority. PwC is projecting franchising industry job growth of 2.5% in 2011, creating 194,000 new jobs.

2. Economic output- The gross value of goods and services a business produces-is expected to grow for all franchise business format lines in 2011.PwC expects output to grow by 4.7% or $33.3 billion in 2011, from an estimated $706.6 billion to $739.9 billion.

PwC projects that the three franchise business lines that will experience with the largest percentage increases in output in 2011 will be: Automotive, Commercial and Residential Services and Personal Services.

3. Increased number of franchise establishments- The accelerating economic recovery expected in 2011 is expected to lead to growth in the number of franchise establishments, with the largest gains in franchise establishments projected in the following three sectors: Lodging (4.4 percent growth), Automotive (3.9 percent growth) and Retail Products and Services (3.9 percent growth).

With franchises and business opportunities available in the fastest-growing sectors, and the economy rebounding, now is an opportune time to become your own boss.

Regardless of whether you have previous industry or business ownership experience, franchises and business opportunities enable you to become your own boss in the industry of your choice. Discover the rewards of business ownership.

The Best Social Media Tools and Practices for Franchises

 By, Andre Kay

As social media engagement and practices become more of a requirement for franchises, it’s now more important than ever for franchise owners to adapt to the social media and location-based platforms, where their consumers are already creating conversations. The majority of locally owned franchises still don’t know which platform would be most engaging and measurable, or which will justify the cost for taking the leap into social media.

1) Facebook- According to a recent study released in January 2011 from the University of Massachusetts Dartmouth Center for Marketing Research, 71% of companies in the U.S used Facebook as a marketing tool in 2010, up from 61% in 2009, with only 9% of those being Restaurants and Franchises, which leads us to the first platform:

Twitter, being not even close to the community size of Facebook, can still be as effective. Just keep these 3 critical rules in mind when launching a Twitter presence for your franchise:

III) Engage - Your customers are already talking about you, it’s your job to join in on the conversation. Use contests, trivia, and polls to create engagement, interaction and most importantly,  to reward your customers.

4) Google Places -  This is probably one the most powerful social platform, out of the 5 listed here. When a customer finds you on Google Places, its because they are searching for you, your products, your services or competitor. ”More of your customers search for your business on Google than anywhere else, so it’s important to make sure your business listing is up to date and can be easily found on Google.com”, according to Google.

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