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To hatch an idea, or buy into one?

So you're thinking about a new day job.

Maybe you have it in you to run some Old Economy-style business - one where success is based on moving actual products.

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Very retro-revolutionary.

One route: Buff up your best Big Idea and get in line for some of the venture capital that's so abundant these days. It can't all be meant for new dotcoms.

Another way: Sign up for a franchise of an established company selling anything from car parts to cleaning services to cheeseburgers.

Some of the conventional wisdom on such businesses - that they have a higher success rate than independent start-ups, for example - may be misleading, says Mike McDermott, the writer of our lead story and a longtime tracker of franchising.

But while taglines like "billions and billions served" hint at sprawling chains with galaxies of bureaucratic hierarchies, not all franchise companies are giants.

Of more than 1,200 "franchise systems" studied for a new report by the Washington-based International Franchise Association Education Foundation, more than half had fewer than 50 outlets.

And the study cited a rise in the percentage of franchisors (parent companies) in business for 12 years: from 58 percent to 62 percent between 1997 and 1999.

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Some 75 percent of companies surveyed had initial-investment levels "below $250,000" - excluding real estate.

Says a spokesman for the Small Business Administration, on the other hand, the "vast majority of [independent] businesses start with less than $25,000, many with less than $10,000."

And franchise critics balk at the raft of fees charged by franchisors. See where you stand.

(c) Copyright 2000. The Christian Science Publishing Society


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