Time to buy a franchise? Research first, as industry expands quickly.

• Author: Bohi, Heidi
• Position: FRANCHISES

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For 20 years, everyone knew Ted, the local handyman, was the go-to guy. If something was making a funny sound, he'd figure out why. If it was a job too small for the big guys, he was the one to call. Ted was clean cut and dependable, and always brought candy for the children.

Although he loved the freedom of being his own boss and setting hours, as he tried to imagine life another 20 years down the road, he often worried if he would have a future or just a paycheck. Although he was good at his trade, he wasn't a businessman and when he had tried to do marketing or expand, it had been a waste of time and money.

Then, one day, instead of Ted's truck, shiny new Mr. Handyman vans started being spotted in front of people's homes. There were Mr. Handyman ads on the radio and in the newspapers. There were customer service satisfaction guarantees advertised and refrigerator magnets that said "On time. Done right." When someone from Mr. Handyman came to fix something, he always took his shoes off and put special paper covers on his feet. The next day, Mr. Handyman sent a thank you card with a coupon for the next visit.

Mr. Handyman, a home repair franchise, is the fastest-growing company of its type in the country and the largest worldwide. Business owners like Ted continue to make a living as independent contractors, though more and more, the independent operators of the world like him cannot ignore the benefits of aligning with a franchise company to be able to take advantage of the proven business model, which--depending on the franchise--may include benefits such as advertising, training, networking, technical support, and other business support services that many one-man operations cannot afford, or simply do not have the expertise in.

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GROWING INDUSTRY

But home repair services are just one small segment of the franchising industry. Americans will spend about $835 billion this year in the country's 855,000 franchise establishments, according to a report from PricewaterhouseCoopers. Look around and you will see businesses that you probably did not even know are part of the world's largest economic driver. Besides the obvious fast food chains--which gave rise to the franchising industry as Americans became increasingly mobile in the mid-1900s--today there are 1,500 different franchise business companies, known as franchisers, in the United States alone, employing more than 18 million people. According to the International Franchise Association (IFA), the industry's largest trade group, almost 4 percent of all small businesses are franchises and the industry accounts for 40 percent of all retail sales in the country.

The Singer Sewing Machine Co. was the first franchise to come online in 1851 when Albert Singer used the franchising concept to distribute his machines over a widespread geographic area. His franchise documents became the basis for today's version of franchise agreements. By the turn of the century, there were many other forms of franchising, too, including monopolized franchises for several...