CAN YOU FIND THE


NEXT "HOT" FRANCHISE?


By Kent Craven

SO now you're glad that you missed out on the Krispy Kreme franchise opportunity and In-N-Out Burgers still doesn't franchise its stores. You know that today's business climate is ripe for franchise opportunities. Just how can you find the next "Hot" franchise opportunity and get in on the ground floor? "I know it when I see it." says Kent Craven, Chief Executive at Phoenix based FranNet of Arizona.

He explains that once you understand the macroeconomic and demographic characteristics that create the right situation for a "Hot" franchise opportunity, most astute business people can also recognize these opportunities. "Most people know what a needle looks like, the hard part is knowing where in the haystack to start looking."

Craven continues, "It's relatively easy for sophisticated business people to evaluate opportunities once they know at which ones to look. The more important part is to know which ones to look at in the first place." Craven's firm has some help looking through haystacks. It is a member of North America's largest group of franchise consultants with nearly 70 offices and 120 consultants, each looking through their local haystacks.

According to the International Franchise Association, the Washington, DC based, non-profit trade organization, there are over 4,000 different franchise business systems offering franchise opportunities in America. According to Craven not all franchise companies are created equal. "You need to know how franchising really works in order to evaluate different franchise systems operating in the same marketplace."

Research by Professor Scott Shane, while at the Georgia Institute of Technology, shows that fully seventy-five percent of new franchise systems go out of business within ten years. Other research commissioned by the Small Business Administration shows that the offspring of the surviving parent companies, that is the individual franchised outlets, experience about a 90% survival rate in the long term. That is about 500% better survival rate than independent small businesses.

"Hot" franchises tend to be early in the life cycle curve hence there may be more inherent risk. But Craven assures, "Once you know what to look for it's pretty easy to pick a winner." Register for the Workshop and see for yourself.

The author, Kent Craven, is the longest tenured office owner in FranNet. FranNet has worked with SCORE Chapters nationwide since 1987 to help educate prospective business owners about franchising. Contact him at www.frannet.com/kcraven or by phone at 602 224-9333 ext. – 2.

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