How to profit on the franchise path

Grant Fawcett had worked for his family's six McDonald's franchises. So when he was looking at business ownership last year, he and wife Amy, another McDonald's franchising veteran, chose franchising.

They bought the master franchise to build or franchise as many as 27 Apple Spice Junctions to provide box lunches and catering to corporations in Orange, Riverside, and San Bernardino counties in California. The first is in Irvine, Calif.

Hundreds of thousands of people like the Fawcetts own franchises sold through 2,300 companies in 100 different industries. And that is just in the United States.

Franchising is a means of distributing products and services in which a company provides a brand and operating system to franchisees who provide the money and elbow grease.

If you've ever considered taking your savings or a buyout from your corporate employer to start your own business and thought that buying a franchise would be the safest way, here are some tips from to help you decide.

Research before buying.
Before Ken Smith bought a Handyman Network franchise in Milford, Conn., he researched the industry and found it was growing rapidly. He studied several companies, collected their Uniform Franchise Offering Circular that spells out the details of each business, and interviewed company executives and existing franchisees.

Some franchises cost more than a house. Study before you invest.

Be on guard.
Like any seller, franchisers want to put their best foot forward. They accentuate the positive and downplay the negative.

''Don't believe their hype," says David Levine, who bought an Action International Business Coaching and Essentials franchise in Highland Park, N.J. ''It takes persistence, reputation, and client satisfaction."

Apply for a federally guaranteed loan.
Teachers Gerardo and Rosie Barboza wanted to buy a Subway sandwich franchise in Moreno Valley, Calif., and the franchiser told them they could finance a portion of the purchase with a bank loan guaranteed by the Small Business Administration.

SBA lenders shy away from start-ups, but those who will make new-business loans favor franchisees because they are using a proven system. The Barbozas financed their Subway and a subsequent Maggie Moo's franchise with SBA loans through Comerica Bank.

Follow the system.
After forking over hundreds of thousands of dollars, a surprising number of franchisees don't follow the proven system of doing business. It is one of the most common franchiser complaints.

Cedric Ferrell found that he struggled when he deviated from the system set out for his Costa Mesa franchise of Entrepreneur's Source, a consultant that helps people decide what franchise to buy.

''Why would I want to create my own way of doing things, especially after I paid a lot of money for the franchise?" he asks. ''I have yet to prove these guys wrong."

Don't leave marketing to the franchiser.
Even though marketing is one of the things franchisers supposedly provide, the franchisee must do local marketing, says Scott Bailey, Irvine franchisee for Sandler Sales Institute, a sales training company.

Bailey offers lunchtime seminars as a tease for Sandler's in-depth training. He networks at local business gatherings, seeks listings in publications' calendars, and seeks referrals from satisfied students.

Get involved in the community.
In addition to service, the franchisee succeeds by mingling in the community and promoting the franchise name at the local level.

Patrice Mudd is constantly promoting her four Maggie Moo's ice cream stores in Ladera Ranch, Lake Forest, Laguna Niguel, and Balboa Island, Calif. She donates ice cream for events at schools, churches, and charities.

''Like a good relationship, it takes time to build your name in the community," she says.

Think big.
We return to the Fawcetts and Apple Spice Junction.

Franchisees who become millionaires buy multiple locations and master agreements to develop a large geographic territory for a franchiser. The Fawcetts will be a bit of both. They will own some of the locations themselves and sell franchises for other locations.

What is important is to find a relatively undeveloped area, a growing franchiser, and a concept without too much competition.