Franchising Is No Small Business

Jennie Rodriguez:

Instant name recognition. Reduced risk. A proven system. In some cases lower starting costs. Ongoing support, training and marketing. Those are just some of the reasons wannabe entrepreneurs opt to enter franchise agreements, rather than starting a business from scratch. Those were the reasons behind Ray Barakat’s decision to open a Subway franchise in downtown Stockton.

‘I was going to open a sub business under my own name, but the only thing that stopped me from that was advertising. I could open a store with the same quality, but people will go next door to Subway because of name recognition, said Barakat. Barakat pays about $700 per month to corporate Subway on advertising, depending on the percentage of his sales.

But don’t think franchising is a small business. It’s not. Today in the United States, there are 767,483 franchised businesses employing 18 million people and generating $506.6 billion in payroll, according to a 2004 study by PricewaterhouseCoopers for the International Franchise Association.

And if franchising is big business, its epicenter is… Go ahead.