Evaluate your franchise opportunities

Put a check mark in the box before each item if you can answer "yes." You will want to get favourable an­swers to most of these questions in order to pursue a franchise opportunity further.

A. Is the franchisor successful?

1. H as the franchisor been in business for more than five years?

2. D oes the franchisor have a good reputation and credit rating?

3. A re a significant number of franchises already operating?

4. I s the failure rate low?

5. Is the franchisor offering useful assistance?

B. What about the product or service?

1. H as it been on the market long enough to gain acceptance?

2. I s it priced competitively?

3. I s it a staple product, not a fad?

4. W ould you buy the product or service on its merits?

5. I f the product and supplies must be purchased exclusively from the franchisor, are prices competitive?

C . What do you know about the franchise contract?

1. Does the fee seem reasonable?

2. D o continuing royalties appear reasonable?

3. D oes the cash investment include payment for fixtures and equipment?

4. C an you, as the franchisee, return merchandise for credit?

5. I f there is an annual sales quota, can you retain your franchise if it is not met?

6. C an you have an exclusive, protected territory?

7. C an you terminate your agreement if you are not happy?

8. M ay you sell your business to whomever you please?

9. H ave you had a lawyer study each paragraph of the contract and approve it?

10. D oes the contract cover all aspects of your agreement with the franchisor?

D. What about your market?

1. A re your boundaries completely and understandably defined?

2. D oes the product or service have a market in your territory?

3. D oes the territory provide adequate sales potential?

4. I s the existing competition not too well entrenched?

E. What about you, the franchisee?

1. D o you know where you are going to get the money to invest?

2. H ave you compared the costs to starting other similar businesses?

3. A re you prepared to give up some of your independence?

4. A re you prepared to accept rules and regulations you may disagree with?

5. A re you capable of accepting some supervision from the franchisor?

6. A re you ready to spend much or all of your remaining life with this franchisor?

If your score makes up four fifth “yes” of 30 questions you may become a successful franchisee.

Let’s Ponder: case study

Just now you are proposed the business problem about competition in laundromat. Study the case attentively and be ready to participate in discussion.

The laundromat was once a shiny tribute to urban convenience, rows of spinning machines humming to a modern beat. Then its reputation was stained. People moved to the suburbs and got their own ma­chines. Now the neighbourhood laundromat is cleaning up its act to meet the demands of the renters and students who are its top cus­tomers. Many, such as a franchise laundry Duds 'n Suds, are bright, imaginative, and fun.

Phil Akin, 24, recently graduated from Iowa State University in Ames, where he studied journalism and marketing. He's also president of Duds 'n Suds. His stores — about 50, with 70 more underway — have been operating for about four years. The Duds 'n Suds formula calls for clean, well-lighted stores that usu­ally occupy about 3,000 square feet of space. Half the room is for wash­ers and dryers. The stores have separate machine "islands" so each customer can have his or her own wash area. In the other part of the store, there's a party going on. While their clothes spin, customers play pool, read, or talk. Some watch big-screen television. A cou­ple of people play video games. A few more stand at the bar, eating potato chips and drinking soda — and beer on tap.

Duds 'n Suds serves beer, but not before noon; the suds are only a gimmick. The laundries are li­censed as restaurants, not bars, because they focus on food. A full-time attendant handles the drop-off laundry service and also tends to the bar and the food.

Akin learned about laundries from his father, who runs a coin-oper­ated laundry and vending machine service. In college he bought ma­chines from his father and installed them in fraternity and sorority houses. He pocketed a lot of change and in 1982 opened his own coin-operated laundry in the nearby-town of Nevada, Iowa. He used the income from that store to launch Duds 'n Suds in 1983. Most of its profits are returned to the com­pany to buy real estate, advertis­ing, and equipment.

Duds 'n Suds franchises are typi­cally located in communities where about 20 percent of the residents are 18- to 35-year-old professionals who rent. Start-up costs for each Duds 'n Suds franchise are about $90,000 to $120,000 (including a $15,000 franchise fee), which Akin says grosses an average of $180,000 a year. Approximately 6 percent of the gross is from the sale of beer. The company takes a $3,000 annual royalty, $2,000 of which is spent on the stores.

In his stores across the country, Akin includes local complements. In Las Vegas, for example, the two franchise stores have slot machines. In Ames, Iowa, customers pay $3 for half an hour in a tanning bed. Customers in each locale are sur­veyed to find out what they like and don't like about the stores.

About his own success, Akin is self-assured yet modest. "People have to do their wash every week whether the economy's good or bad," he says cheerfully. Then he adds, "Everybody says, "Won't the beer die out?' It might. As long as we have a good-quality laundry, whatever gimmick we use is irrele­vant. Maybe beer will fall by the wayside and it'll be tanning beds that'll be popular.