Four Advantages to Buying a Big-Name Franchise

This article was written by Janean Chung of Entrepreneur.com.



Hardy Grewal may not be as internationally known as Steve Jobs, Bill Gates and Howard Schultz, but his business is as much of a household name as Apple (AAPL Quote), Microsoft (MSFT Quote) and Starbucks (SBUX Quote). Grewal went from corporate accountant to business mogul in one simple step: buying a Subway franchise.

That giant leap plugged Grewal into the power of a big franchise, yes, but, more importantly, into the bigger powerhouse that is franchising itself. Franchising added $880 billion, more than 140,000 new businesses and 1.2 million jobs to the nation's economy from 2001 to 2005, according to the International Franchise Association. IFA President and CEO Matthew Shay predicts growth will continue, even during the current economic downturn.

Grewal took full advantage of that power potential. Though he looked into other franchises, including smaller chains, he ultimately decided to buy a Subway location in 1989. Grewal figured a large franchise offered more sustainability in the long run and made expansion possible for an everyman like himself.

Two years after buying his first franchise, he says his "accountant brain started working," and he realized that by acquiring units, he could multiply his earnings by five, 10, 20 times. That's when he gradually started buying more units -- at first, one to two a year, then two to three, then five more, then 10 more, until by 2004, he owned 25 stores. ...