Starting a Home-Based Franchise Business; 6 Steps to Help You Find the Right Opportunity
by Caron_Beesley, Community Moderator
- Created: July 20, 2010, 4:45 am
- Updated: March 28, 2013, 3:19 pm
More often than not, when we think of franchise opportunities, we tend to think of businesses with a physical Main Street, strip mall or commercial office presence, (think Subway, 7-Eleven or Keller Williams Realty). However franchises can be found everywhere, including your home.
According to Franchise Direct*, home-based franchises are now one of the most popular franchise sectors out there. A trend that aligns closely with data from the Small Business Administration that reports that home-based businesses now account for an estimated 52% of the 29.6 million small businesses in the U.S.
I;s not hard to see why. Operating a franchise out of your home combines the best of both worlds- providing the flexibility and affordability of operating a home-based business with the low barrier of entry that franchise business ownership can (sometimes) bring.
And the good news is that more and more franchisors (those are the folks who operate the franchise and whom you enter into a contract with) are either adding home-based options to their franchise programs or are focusing exclusively on the home-based distribution model in order to reduce operational costs.
If you are interested in starting a home-based franchise business, here are six points to consider in your research:
Can you Effectively Work from Home?
Operating a business out of your home requires a certain type of personality, discipline, work-space set-up and so on. For a useful 360 degree perspective on assessing your suitability to run a home-based business, as well as tips to get you started, take a look at the Business.gov Home-Based Business Guide.
Of course, while your-business headquarter' may be your home-office, the franchisor may require that you spend a large amount of your time marketing, selling, or just conducting business out and about in your territory' something to consider if family or other commitments dictate that you work out of your home-office most of the day.
Can you Legally do Business from Your Home?
Even if you think you are up to doing business from your home, your local government may not agree. So be sure to research what restrictions the law places on doing business out of your home.
For example, some states forbid the use of residential kitchens for commercial food production. Check what restrictions apply in your locality by reviewing these Zoning Laws for Home-Based Businesses. If you live in a neighborhood managed by a Home Owners Association (HOA), your business activities may be restricted to your HO's Covenants Conditions and Restrictions rules. This article' Can a Homeowners' Association Ban Your Home-Based Business?' offers some quick facts about the law and your rights.
Do You Have that Special Personality to be a Franchise Owner?
Yes, it does require a certain type of personality to make a success of a business idea or system that is essentially someone els's. You need to be able to work within the rules of others; give up a certain percentage of your gross sales revenues to your franchisor; and your territory will be restricted, to name just a few of the stipulations of being a franchisee. For more insight into the'franchise personalit' and whether you can fit into that mould, read Do You Have that Special Personality Needed to be a Franchise Owner? by fellow blogger and franchise specialist - Joel Libava*.
What Type of Opportunities are Out There?
So thinking beyond Main Street and the strip mall, what home-based franchise opportunities are out there? If you are looking for ideas, a great place to start is Entrepreneur.com's 2010 Franchise 500® - Top Home-Based Franchises list. Select any name on the list for a brief overview of each opportunity together with at-a-glance information on investment costs and fees, training and support, and rankings.
Another useful source is the International Franchise Association's a Find a Franchise* search tool that allows you to search for opportunities based on industry, location, financing, etc. (use the keyword search to find home-based franchises).
How Do You Assess a Home-Based Franchise Opportunity?
How do you know when you've found the right opportunity? Assessing a franchise requires research and due diligence. To help you understand what steps you can take to determine how a franchise stacks up read Joel Libava's tips on how to research a franchise.
The law can also help you assess a franchise because it requires that franchise owners provide you with a Detailed Disclosure Document during the pre-sale stage. This is an essential piece of information that can provide valuable insight into your chosen franchise (including financial statements, contact information of other franchisees, and so on). Read Investigating a Franchise Opportunity - How a Little Detective Work and the Law can Help for more information.
Employ Professional Help
Because the tax rules surrounding franchises are often complex, an attorney - preferably a specialist in franchise law - can help you evaluate the franchise package and tax considerations. You might also want to consider using an accountant to determine the full costs of purchasing and operating the business as well as assess your potential profit.
*Note: Hyperlink directs reader to non-government Web site.
- Spotting Work at Home SCAMS - Tips from the government on how to evaluate work-at-home opportunities and franchises.
- Starting and Growing a Home-Based Business - Uncle Sam has some Props that can help!
- Starting a Home-Based Food Production Business: Making Your Culinary Hobby Your Job
- Home-Based Business Smarts -Tips for Finding Opportunity, Starting-Up, and (oh yes) Thriving
- Opening a Restaurant Franchise - Your Essential Checklist
- The Green Business Franchise Scene
- Franchise Opportunity Exploration Starts at the Kitchen Table - Explains how much you should consider investing in a franchise.
- Small Business Franchise and Business Opportunities Guide - This guide from www.business.gov provides helpful advice on buying and evaluating a franchise and information on how to avoid common scams.
- 10 Steps to Starting a Business - The official word on the steps needed to prepare, plan and start a business, from Business.gov.
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