Ray Markham sets a good example for would-be entrepreneurs, who often see franchising as an easy solution to their desire to own a business. While most franchisors do provide a lot of support in the form of training, operations procedures, store formats and sometimes advertising, ownership of a franchise - like any enterprise - requires a competitive spirit and a willingness to keep your nose firmly attached to the grindstone. And that's only the first step. Once you're convinced that you possess these traits, the real work begins. Before you sign on the dotted line, say both franchisees and franchisors, homework is essential.

Know What You Want

Begin your search for a franchise with a personal reality check. "The first thing to determine is your expectations," counsels Quinn Williams, head of the Emerging Business & Franchise Practice Group for the Phoenix- based law firm of Snell & Wilmer. "Do you see yourself owning a dry cleaning franchise? Or do you visualize yourself involved in a computer store? It's important that people buy a franchise they can comfortably envision themselves running."

At the same time," advises Donald Boroian, chairman of Francorp Inc., an Illinois-based management consulting firm specializing in franchise development, overcome an impulse to listen to your heart and nothing else.

"You would think that when people are spending the kind of money necessary to get into a franchise, they would factually and objectively do their homework," he observes. "But the fact of the matter is that most franchises are bought on an emotional level. If prospective franchisees like the food or service provided by a particular franchise from a customer's point of view, and they like the salesperson, they'll often buy.

However, adds Boroian, don't ignore your heart completely. "The most important thing when buying a franchise is to find something you'll be happy doing every day, and not just because it happens to be more lucrative than other options. If you don't love what you're doing, you're going to be in trouble when you start working the 70 or 80 hours that typically define the franchisee's week."

Know What You Can Afford

You've decided on the franchise that suits you best. Your next challenge is figuring out how much money you'll need to open your doors and finding a source to finance your endeavors. Unlike other new business ventures, franchising comes with upfront expenses that are unique. For example, in terms of initial fees to the franchisor - expect $10,000 to $40,000 for training expenses, start-up inventory, signage and build-out specifications to achieve the uniform appearance of the franchise system. You pay all of these out of pocket before making your first sale.

When determining the amount of capital you will need, be sure to calculate the revenue you expect the business to generate and whether it will cover your monthly loan payments. Consider your worst-case scenario: How low can your sales go before you're unable to meet your loan obligation? You don't want to borrow more than you can afford.

There's no better tool for calculating the amount of debt you can take on than a detailed business plan. It will force you to carefully think through every aspect of your business. Just as you would look at your bank accounts and monthly budget before buying a home, you need to prepare a business plan with realistic cash flow analyses and operations projections.

Pound the Pavement

Another important aspect of doing your homework is to talk to other owners of the franchise you are considering. Also talk to customers, if possible. Ride with owners as they service their route, make cold calls or attend meetings to gain a solid feel for operating the business.

The rationale behind this information-gathering exercise is to help you evaluate whether the potential franchise is worth your effort and investment. So don't be afraid to ask candid questions. Here are a few to consider:

- Do you enjoy this business? Are there any aspects you don't like?

- What kind of support have you received from the franchisor? Was the training program useful in establishing the business? Is the company responsive when you have a problem?

- Given what you know now about the company, would you make the same decision to buy this franchise? Would you buy a second location if it were available?

- Is the business seasonal? If so, how do you handle staffing for busy times and deal with financially slow times?

- Is advertising effective? What materials are supplied by the company, and are they well produced?

- Have there been encroachment problems with the franchisor? Has the franchisor opened a company store or sold another location in your market?

- What did your gross sales total last year? What are your product costs? Is the supply of product adequate?

- What can I expect to net from this franchise on an annual basis?

In doing your research, make sure you speak to an adequate sampling of franchise owners; five or six should be sufficient. The Uniform Franchise Offering Circular (see below) contains a listing of franchisees in your state as well as names of those who have left the program in the prior year. Use this listing to select your interviewees; don't allow the franchisor to guide you to one or two hand-picked high performers.

Read the UFOC

Caught up in the excitement and potential of their new venture, franchisees often make the mistake of never reading the Uniform Franchise Offering Circular. An imposing legal document, it is mistakenly dismissed by them as meaningless legalese containing fine print required by some government agency. In fact, the UFOC is a mother lode of invaluable information for the investor considering a franchise purchase.

The UFOC includes the franchisor summary that details the franchisor's corporate name, its place and date of incorporation; a description of the corporate officers and their business experience; and a basic description of the franchise being offered.

The UFOC also provides financial information about the franchisor in the form of its three most recent annual audited financial statements. In addition, it carefully lays out the fees charged to franchisees, noting if the franchisor has negotiated a lower initial fee with any purchaser in the past year. From this you learn that franchise fees are indeed negotiable, a fact not widely discussed by franchisor salespeople. Ask the franchisor for information about fee variations and don't be afraid to negotiate variations for yourself.

Also included is an estimate of initial franchisee expenses broken down in categories such as real estate, training, leasehold improvements, inventory and working capital. When checking with other franchise owners, be sure to ask how their initial expenses compared with the estimate provided in the UFOC.

Be sure you review the product and supplier information section. Many franchisors require purchasers to buy from approved suppliers; others have organized purchasing cooperatives; still others impose product standards to which franchisees must adhere.

In addition, carefully peruse the listing of services and commitments the franchisor is required by contract to deliver to franchisees before and after commencement of the business.

Lastly, pay close attention to the sample copy of the franchise agreement and other documents you will be required to sign for franchise rights. A complicated, legal contract, it should be carefully reviewed beforehand by an attorney or business advisor. As in the case of the franchise fees, don't be afraid to negotiate changes. A good legal advisor can assist you with recommendations on unacceptable provisions and help in any negotiations. In addition, discuss with your attorney the franchisor's bankruptcy and litigation history, which is also included in the UFOC. It may provide useful information about the franchisor's enforcement style or any problems in the system that have previously arisen.

Beware of Pie in the Sky Promises

San Francisco business consultant Eric Tyson advises potential franchisees to observe the demeanor and approach of franchising company representatives in your interactions.

"Although all franchising companies should have enthusiastic people, the best ones want to check you out almost as much as you should want to check them out," he claims. "Smart franchisors don't want to sell a franchise to someone who's likely to crash and burn or tarnish the good reputation they've worked so hard to build. These companies know that they make more money from ongoing royalties if they sell franchises to solid investors who are likely to be successful.

"Conversely, run as fast as you can, in the opposite direction, if the franchisor tells tales of great riches from just a small investment of your time and money," adds Tyson. "Some franchisors are more interested in selling franchises than in finding the most qualified franchisees and helping them succeed. Some may also attempt to pressure you into making a quick purchase decision and be evasive about providing detailed information about their business. If they don't want to give you the UFOC, run extra fast."

Dig Deeper

While the UFOC provides extensive information about the franchising company, it doesn't hold all the answers. Before signing a contract, Tyson urges, check with regulators.

"Franchises are generally regulated at both the federal and state levels," he notes. "The Federal Trade Commission regulates nationally and the state agency is usually the attorney general's office or the department of corporations. Check with these agencies to see if they have any complaints on file. You may also want to check with the Better Business Bureau in the city where the franchisor is headquartered."

In addition, Tyson recommends running a credit report on the franchising company to determine the kind of business relationships the franchisor has, and how it deals with payment and debts owed to suppliers and creditors.

Final Words of Advice

Some of the best advice comes from franchisees themselves. "Be willing to follow the franchisor's directions," suggests California Closets' Ray Markham. "After they've been in business for awhile, too many franchisees feel that they know more than the company. I've been very receptive to California Closets' ideas, and they've been very helpful to me."

According to Juice World franchisee Julie Gularte, "The top priority is location. You can have the best product in the world but if you don't have a good location and neighborhood marketing program, your franchise will not be nearly as successful.

"At the same time," continues Gularte, "you need to have a good product, one you believe in. And you must be willing to give 110 percent of yourself. If you aren't, you shouldn't be in business."

Finally, don't expect to become rich overnight.

"Don't go into franchising thinking you'll make money from the get-go," warns Markham. "Make sure you pay all your vendors and employees first. Eventually, you start making money for yourself and enjoying the results of all your hard work."

Emphasizing Customer Service: Play It Again Sports

Jeanette and Pete Tachis got into franchising six years ago in a rather roundabout way. Their youngest son became interested in playing ice hockey, and the practical parents began looking for less expensive alternatives to the $200 price tag for a new pair of skates. While running errands in the San Francisco Bay Area city of San Bruno, Jeanette Tachis was intrigued by the bright pink and orange sign of a Play It Again Sports store.

It would turn out to be one of life's seminal moments. Tachis left the new and used sporting goods outlet with a pair of $65 skates and the vision of a new career opportunity for herself and her husband.

"I was very impressed with the name and the concept," she recalls. "We had two growing teenage sons who were really involved in sports, and new equipment is not cheap. The recycling aspect of the operation made it even more appealing because all that used equipment wasn't ending up in landfill.

"Weeks later, when dropping off some used equipment, I asked the owner how he started his business. He told me it was a franchise."

Tachis and husband Pete had already discussed opening their own business. Both came from banking backgrounds; her area of expertise was customer service, his was lending. Before jumping into the franchising process, however, Pete Tachis worked for the San Bruno store, searching at area garage sales for quality used equipment. It proved to be good training because one requirement for launching a Play It Again Sports franchise is acquisition of $10,000 worth of used merchandise.

Three years later, prepared both mentally and financially, the Tachises obtained a franchise for the company's first San Francisco store. Then, in 1995, the owners of the San Bruno store sold their thriving business to the Tachises. Today the ambitious couple is pursuing a second location in San Francisco.

Jeanette Tachis enthusiastically praises the parent company, Minneapolis- based Grow Biz.

"If you need them, they are always there to help," she says. "Customer service is emphasized during the required owner training, which was very important to me. We are provided with very professional commercial TV spots; all we have to do is put our name and location on them. We also buy a certain amount of new inventory through Grow Biz vendors who give us a very good price.

"In addition," continues Tachis, "Grow Biz holds semi-annual conferences with workshops on helpful subjects such as time management and hot industry trends, as well as trade shows with vendors of new inventory. The shows give owners the opportunity to buy special merchandise at a good price, which we can subsequently pass on to our customers.

"Both of the Tachis' existing stores are thriving, chalking up substantial increases in sales and profits every year they've been open. Theirs are just two of the successful 700 Play It Again Sports emporiums around the U.S.

"We emphasize a high level of customer service and our customers expect and appreciate it," Jeanette Tachis asserts. "A large sporting goods store opened in Daly City (just south of San Francisco), and we felt the impact briefly. But our customers soon came back because of our good service. We're also the only ones who will take used equipment. Our customers are very loyal, and our repeat business is incredible as a result - about 30 percent of sales."

Their stores have become family endeavors with a parent and son at each location. In fact, the older son manages the San Bruno shop.

"We absolutely love it," Jeanette Tachis says about having their own business. "We're more in control of our lives and our destiny. The first year in operation, we wondered whether we should stay open on New Year's Day. Then it hit us, `Gee, we don't have to ask anyone. It's up to us.' That realization was very exciting."

Providing the Best Experience Possible: Juice World

There's nothing like searching in vain for a refreshing, healthy drink on a sweltering summer day to make you want to start a franchise. At least that's what inspired Mike and Carol Fullam and their daughter and son-in-law Julie and Justin Gularte to open the first Juice World.

Recalls Carol Fullam, "Julie and Justin were due to start the University of California at Chico in the fall. When walking around town in the dead of summer looking at apartments for them, we all became very thirsty. We craved something cool and healthy - like a fruit smoothie - but all we could find were sodas.

"Ironically, Mike and I had been looking for a business idea," Fullam adds, "and at first we investigated purchasing a juice bar franchise from another company. We eventually decided to start our own company." What made the concept of their own business even more appealing was that it would provide employment for both Julie and Justin.

Once that conclusion was reached, the family embarked on months of research. The Fullams, both of whom are accountants, first analyzed the financial structure of their proposed venture to determine if it would be viable. Then they devised a business plan, which was later included in their application for a Small Business Administration loan. Equal time was spent developing products and identifying their market.

"We did a lot of tasting," Julie Gularte remembers. "We found that the drinks many of our competitors sold were overly vitamin-tasting or that the particular type of fruit was indistinguishable. When you taste our raspberry, in contrast, it's distinctly raspberry.

"We learned from our competitor's strengths and exploited their weaknesses to come up with a more successful concept," Fullam says.

Currently, Juice World numbers three stores: the original Chico establishment, one in San Francisco's Financial District and another in Santa Cruz about 75 miles south. The latter two are owned by friends of the Fullams. In preparation for expansion - the Fullams and Gulartes hope to open 12 new franchises and 12 company-owned stores in the next 12 months - they worked with a consultant and architect to create an operating procedures manual, customer service program and design format for the stores.

"We want to give our customers the best experience possible," enthuses Julie Gularte. "Employees have free rein to please customers without worrying about making mistakes. The San Francisco store even offers free delivery service. It also has a 'Customer of the Week' program with Polaroids of the winners posted on the wall."

Adds her father Mike, "The program has become so popular that customers are competing for the honor."

Each store also boasts a bright red phone with a direct line to Mike Fullam. Accessibly located in the front of the premises, it puts customers and employees in contact with a company decision-maker. If Fullam is unavailable when a call comes in, he responds within 24 hours. He also receives customer comment cards every week that are passed on with his comments to store managers for follow up.

Juice World's customer service emphasis also extends to tipping: it's not allowed. Explains Fullam, "We don't want employees to base their treatment of customers on whether they will or will not get a tip. This required a big attitude change for our employees and customers, and we raised employees' pay to compensate. Because of customer input, however, we are considering putting a jar out for tips. But the money will go for scholarships or some other local cause."

The Fullams and Gulartes are looking for "like-minded entrepreneurs" to purchase their franchises, Carol Fullam underscores. "The relationship between the franchisor and franchisees is very important. We want to be in business with people who want to provide a healthy product, who share our customer service philosophy and who have a non-corporate attitude. After all, that's what lured us into franchising in the first place."