Phoenix, Az - 8 June, 2006 -

Carol Rath knew it was time for a career change when her 2-year-old granddaughter pointed to the children's indoor playground where Rath was manager, and said: "That's where my grandma lives." Twelve years later, Rath, 54, has no regrets that she quit and opened a franchise instead. Her workweek went from 80 hours as manager of the playground to 45 hours as owner of three East Valley Subway locations. "If you do what they tell you, you can't fail," she said of the support she got from Subway. advertisement Rath is like many others who make the leap into business for themselves but prefer the safety net of a tried and true formula that franchises offer. "It's easier for a woman to start a business in a man's world by using the concept of a franchise. The setup is done more easily than if you had your own freestanding location and tried to open a mom and pop by yourself," she said. Across the country, the number of female-owned businesses grew 20 percent between 1997 and 2002, twice the national average for all businesses, according to the U.S. Census Bureau. Women owned nearly 30 percent of non-farm businesses in the United States in 2002. "Franchising is definitely a growing trend and it's also attractive to a lot of women," said Steven Strasler, a professor at Thunderbird, the Garvin School of International Management in Phoenix. Colleague Bob Hirsch, a professor of global entrepreneurship and director of the Center for Global Entrepreneurship at Thunderbird, said that about 10 percent of franchises are owned solely by women, 20 percent are owned by male and female partners and 70 percent are owned by males. "Franchising definitely reduces the failure rate of entrepreneurs as it gives support and structure," Hirsch said. Depending on whose numbers you review, failure rates for franchises can be as high as 95 percent in the first five years or as low as 30 percent. Hirsch said it's hard to quantify because of differing definitions of what "failure" means. "Make sure do your homework and make sure the franchise has credibility and staying power and that you get the support warranted by the fee and the percentage of your business income that is commensurate with what you get out of the franchise. Buying a franchise is not a panacea," Hirsch cautioned. In Rath's case, she didn't start her own business right away. She went to work first for the company, making sandwiches. Then she progressed to manager and later general manager. Eventually she sold company officials on the idea of a Subway at Ellsworth and Baseline roads before the area had homes and shopping and spent $10,000 to buy the franchise. "They came out here and saw cows and a pasture, but I told them there will be something here soon and showed him a five-year plan for the neighborhood as far as houses and shopping," Rath said, adding that the franchiser must approve the location and she was required to take a qualifying test and attend a two-week training class. After several years in business, Rath has paid off the home equity and Small Business Administration loans she used to open the first store as well as the debt from two more locations. She used the remaining cash to build a Subway inside the Apache Junction Wal-Mart. She plans to open another Subway at Signal Butte and Apache Trail in the next year. Strasler, from Thunderbird, recommends that prospective franchise owners take a good look at franchiser's finances. "Are the revenues chiefly from franchise fees and selling more franchises, or are they from royalties and the income that the businesses are generating. Royalties are much better," he said. For example, it's about half and half at College Nannies and Tutors. Joe Keeley, 25, president of the Minneapolis-based business, won the 2003 Global Student Entrepreneur Award from the Entrepreneurs' Organization. "We want our franchisees to be successful," Keely said. His revenues are about half franchise fees and half royalties after five years in business. He that of his seven franchises four are partly or entirely owned by women. "This is a very large percentage in comparison to national statistics on business ownership. The reason for this is in part because women, and mothers especially, see the high demand for College Nannies and Tutors services because they have lived it themselves," he said. "They know how hard it is to find quality child care and relate to the demand for educational services. Also, these women want to make a positive impact in the lives of other mothers and families." A single franchise costs $15,000 while a combined franchise, like the one Mona Lee of Gilbert purchased, costs $25,000. It covered two weeks of training, an operations manual to start the business and ongoing support. "The Web site technology is outstanding and always being updated for improved procedures," Lee said. Her College Nannies and Tutors franchise has placed about 60 nannies in her first year in business. She also employs nine tutors in her Learning Center at 1120 S. Gilbert Road in the Gilbert Town Square. Lee, 55, also has been involved in the personnel part of several start-ups and has done planning and budgeting. "I feel my background in these start-ups and human resources, with recruiting and employee relations, has been extremely helpful in starting and managing this business," Lee said.

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