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Opening Franchise Cuts Risk in Recession

Stocks in this article: PWC MCD

Investment requirements: The initial investment that franchisors require depends on overhead and the complexity of running the business. The commercial cleaning company Jani-King, which boasts more than 12,000 franchise owners worldwide, offers investment opportunities for as little as $3,000. McDonald's (MCD), on the other hand, requires a minimum of $500,000 in non-borrowed assets before it will consider a potential restaurant franchisee.

What to look for before you leap: All franchisors are legally required to provide a disclosure statement, also known as the Uniform Franchise Offering Circular (UFOC), at least 10 days before the signing of a franchise agreement. Potential franchisees should read through the document for basic information such as additional fees, designated sales territories and available training programs. But they should also look for red flags such as litigation and bankruptcy histories. It makes sense to scour the Web for chat group discussions about any given franchises. "If a group of franchisees isn't happy, they're going to talk about it," Harrison says.

Best bets: The fastest-growing franchise fields include quick-service restaurants, real estate and retail food, according to PricewaterhouseCoopers. Franchisors in these fields include Great American Cookies, which requires an investment between $170,000 and $300,000; the home-staging company Showhomes, which requires an investment of $43,800 to $74,000; and the drive-through coffee franchise Mountain Mudd Espresso, which requires an investment of $105,000 to $1.9 million.

"Anything that's in health and wellness is really hot right now," Harrison adds. "As the baby boomers start to age, they're looking for these kinds of services."

For sure, consumers want to remain healthy in any economy, which is enough of a reason to invest in a franchise like 1-800-GOT-MOLD. "We're really recession-resistant," Earle says.

-- Reported by Carmen Nobel in Boston.

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