Popular images of franchises include retail establishments such as fast-food restaurants and convenience stores. Over 500,000 franchise businesses operate in the United States, owned by over 600,000 small business owners and employing 8,000,000 individuals. In addition to the popularity of retail franchises, many service businesses have been franchised successfully. The contract spells out the responsibilities of both franchisor and franchisee. Franchising encompasses similar risks and potential rewards as any other entrepreneurial venture, and calls for the same careful planning to ensure success.
Reputable franchises hold significant advantages over other types of small businesses.
Caffey concludes by advising potential franchisees to seek help from trained attorneys, accountants and other professionals, and stresses the importance of a solid business plan. Would-be franchisees take steps beyond avoiding those mistakes mentioned above to protect themselves from fraud and guard against poor business decisions. These would-be franchisees would do well to pay attention to the franchisor's management's history, and any litigation in which the franchisor is involved. They should try to get written earnings estimates, if possible. Echoing Caffey, Koss-Feder stresses the importance of using an experienced franchise attorney, and scrutinizing the franchise contract very closely before signing.