Franchising is certainly a tried-and-true way of becoming a business owner. You gain instant market recognition, training and ongoing support while growing your new business. But buying into a franchise is not a guarantee of success — you’ll still need to perform some due diligence.

The Costs

Most franchises include a front-end franchise fee (typically, a lump sum) as well as royalty fees that can range from 3 percent to 8 percent, plus an ongoing marketing/advertising fee.

Startup costs for an Oreck Clean Home Center, which ranked number two on Entrepreneur magazine’s Top 10 New Franchises for 2011, can run as little as $84,600. At the other extreme, Yogurtland Franchising Inc. (number eight on the Entrepreneur list) can top $521,500.

What You Get

Most franchise operations offer turnkey packages, giving you almost everything you need to get going. As expected, though, you’ll typically pay more for the ability to jump right into a small business opportunity.

Some franchises require the buyer to be the owner-operator and actually work on site. Perennial heavyweights such as Subway and Supercuts are examples of franchises that do not allow for absentee ownership.

Others, such as newcomer Caring Transitions, allow for absentee ownership. In fact, this business, which involves sales of estates and household goods, can be run from home.

Career Change or Investment Opportunity?

It’s important to consider whether you are seeking a “job replacement” opportunity as a franchisee, or are looking for more of an investment opportunity with a franchise that allows for absentee ownership and/or ownership of multiple locations. Working professionals looking to build a second income or retired/semi-retired professionals looking to supplement their income can benefit by investing in these types of opportunities.

What to Look For

You’ll need to ensure a good match with both your skill set and your personality. For example, experience in the food-service industry is great for a potential Wendy’s franchisee. But if you’re someone who wants things done your way all the time, you may be frustrated by the restrictions of life as a franchisee.

Look also for solid trends. Fitness and weight loss are perennial favorites, as are businesses related to children and seniors. But you’ll need to think about what competition might appear or how your business might need to adapt to changing tastes and technology. No franchisor is going to tell you that you’re buying in at the tail end of the business cycle.

Finally, make sure you receive (and review) the proper paperwork. Franchise laws require that you receive a document called a Uniform Franchise Offering Circular (UFOC) at the first face-to-face meeting or 10 business days before the franchise agreement is signed or money is paid.

Paying for It All

Nevada State Bank is a Preferred Small Business Administration (SBA) Lender. The SBA has a directory of franchises that have met their requirements and for which the SBA offers a streamlined loan application process. Just contact your Nevada State banker for details.