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Wyoming Business Tips for Nov. 23-Nov. 29

November 17, 2014

A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.

By Jim Drever, WSBDC regional director

“How do I choose between starting a franchise and my own startup?” Beth, Laramie

Franchising allows you to use someone else’s business model -- and usually supplies, trademark and group advertising -- for a fee to start a business instead of coming up with your own business molded in the form you wish.

Immediately, you can see there are some stark differences between the two that will determine how you, individually, will enjoy the business and be successful with it.

More than 1,300 franchises are listed with the International Franchise Association (http://www.franchise.org), and they range from real estate offices and financial businesses to the more common fast food and auto parts stores. Unless you have a new or location-specific idea, there is probably a franchise out there doing it already.

For any franchise, there is a franchise agreement that should, in plain English, explain the responsibilities of the franchisor and franchisee. It would be in your best interest to contact a franchisor in the area of business in which you are interested and ask to see the franchise agreement. This will help you determine whether it is right for you. Here are a couple of things to consider as you read through it:

-- What degree of freedom do you want to have in running your business? Some franchises are strict regarding uniforms, layout, building design, policies/procedures and, in general, may not be compatible for those who need to be their own bosses in control of everything. Some franchises aren’t as strict, but there will always be rules to follow to comply with the franchise agreement.

-- What are the costs? There usually are initial costs, but what often are more important are the monthly costs. These franchise fees are often “taken off the top” as a fixed expense, like rent is, rather than as part of profit. In slow months or areas with a small customer base as with many Wyoming communities, they can be financially crippling. Some banks and franchises themselves offer financing to help with startup costs.

There are too many other considerations to cover in a single post, but I would recommend speaking with a business adviser to help consider your options between franchising and starting your own business.

A free seminar sponsored by Wyoming Entrepreneur SBDC covering this topic will be offered. Franchise experts Stephen Hogan and Stacy Swift, both from Frannet, a nationwide franchise-consulting firm, will lead the seminar in Laramie Thursday, Nov. 20. For more information and to register, visit www.wyen.biz/events and click on “Is Buying or Starting a Franchise Business Right for You?” under November, 2014.

A blog version of this article and an opportunity to post comments are available at http://wyen.biz/blog1/.

The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email wsbdc@uwyo.edu or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.


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Chad Baldwin

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