New York SBDC Research Network

Once upon a time, when I started working for the SBDC a decade and a half ago, getting an SBA-backed loan for a franchise was, I was told, a torturous event. Even SBA acknowledged that "inconsistent decisions", "excessively long processing time" and "failure to understand industry differences" plagued the process. Now, "in a major effort to help small business owners, the U.S. Small Business Administration (SBA) offers the Franchise Registry that will expedite the processing of loans to small business franchisees." Some franchises will be vetted so that the potential franchisee doesn't have to do so much work. Franchise Registry.com is in "a partnership with FRANdata , the only objective information company that researches and reports on franchising." It has some useful information, both free and for a fee; among the latter are UFOCs, Uniform Franchise Offering Circulars, which sell for $220 (older versions of the documents for $2

In late 2005, I was part of an SBDC meeting where we heard from a director of The Entrepreneur's Source . This company provides coaching/counseling services to people interested in owning a business, with a specialization in franchises. Theoretically, they help the budding business owner in finding the franchise opportunity that best suits his/her personality, lifestyle, etc. They are not brokers, nor do they represent any particular franchisor. We often get questions from advisors with clients who want to own a business, but aren't sure what type is best for them. If, during discussions with them, you & your client can't seem to find that industry perfectly suited to them (and the client is interested in running a franchise), then keep this site in mind.

This article appeared in yesterday's online version of the Wall Street Journal. Misleadingly titled "Four Danger Signals When Franchising," (it ought to read "When Buying a Franchise"), it re-visits territory that we've explored in this blog over the years. Nevertheless, this is practical information to review with our clients. It's a brief article, and it highlights three specific issues: 1 - Lots of litigation and closures - Noting that franchisors have an obligation to disclose any current or past litigation in the franchise offering circular; 2 - Too many bad reviews - Recommending that potential buyers interview a variety of current owners of the franchise to get their honest take; and 3 - High-pressure sales tactics - Which ought to speak for itself. A lot of this is common sense, but I've heard many stories from all of you over the years about clients who bought a franchise first, then asked questions later. That's the wrong order to