So you want to be your own boss? Well, you should know that approximately 90-95% of most independent small businesses fail in the first 5 years.

One of the key reasons for business failure is lack of capitalization. One method of beating this failure rate is to buy into a proven business system or plan. Just how do you do that? Franchising just might be the answer for you. The world of franchising is one that can offer many rewards if chosen carefully, but potential franchisees must do their research. The typical income for a new owner ranges from 100K to 160K after expenses.

So what are the benefits and startup issues associated with franchising? Here are three considerations before prospective owners buy a franchise opportunity: As was stated, 95% of all new businesses fail in the first five years. Conversely, 97% of all franchises are still in business after 5 years. The reason for this is that franchising offers a solid foundation for the potential business owner by allowing entrepreneurs to gain a “leg-up” against other start up businesses by buying into a proven business system.

Although a great way to “lower the learning curve” and chances of failure in the first 5 yrs., buying a franchise comes at a cost. To demonstrate the startup fees and costs in franchising, potential franchisees can expect a total investment that includes the cost of the business (either new or resale), the franchise fee and the brokerage fee. Other financial considerations should include 6 mo to 1 yr worth of startup capital to ensure you are protected against potential market uncertainties or other unseen expenses you may encouter during the operation of the business.

With this, it should be noted that start-up costs might be a barrier to entry for many potential franchisees. Many franchises will require you to have 400K-500K (USD) plus in individual net worth and 100K (USD) plus in liquidity. As an example, a franchisee can expect to pay anywhere from 240K to 375K for an Alpha Graphics company purchase depending upon the size of the business.

Potential franchisees must decide what franchise is right for them, plus consider the costs associated with the first few years of operation. Prospective buyers must review different business offerings (through small business opportunity websites such as bizbuysell.com) and then contact their local business broker to work through the financials and legal issues. Remember that most business brokers charge a 10% fee on average for helping the seller sell their business and the costs are, in many cases, passed on to the buyer in the form of higher overall business valuations.

If costs associated with starting a franchise seem somewhat of a barrier to entry or out of your budget, consider a popular lower cost “online franchise”.