Start up -- Franchise -- Buy out?

Which is best for you?

This exhibit reviews and compares the risk elements associated with each choice. The degree of self satisfaction and ego gratification associated with each choice has not been addressed although it must be acknowledged that these factors are perhaps the strongest motivators for business ownership. In this regard, start ups provide the highest degree of satisfaction and gratification and buy outs perhaps the least with franchises somewhere in the middle. Interestingly, most business observers and our own experience indicates that start ups, albeit the most satisfying choice, have the poorest chances for success.

	Start up	Franchise	Buy out
Location	unknown	unproven	proven
Product/service acceptance	unknown	unproven	proven
Working capital requirements	unknown	unknown	proven
Time to break-even	unknown	unproven	proven
Time to profitability	unknown	unknown	Immediate
Level of profitability	unknown	unknown	proven
% Return on initial investment	unknown	unknown	proven
Choices available	unlimited	plentiful	limited
Ability to pre-measure management skills required	guess	educated guess	visible
Ability to find the "right opportunity"	easiest	easy	difficult
"Due diligence" (check it out)	easy	easy	difficult
Opportunities for improvement	unknown	unknown	identified
Training and assistance	none	Yes - Franchisor	Yes - by seller
Financing:	unlikely	probable	likely
Outside collateral required (ie: Home)?	Yes	Likely	Seldom
Source of lending	Bank/2nd mtge (Home).	Equip. finance	Seller finance
Chances of success	low	high	high

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