This is Bob Doughty with the VOA Special English EconomicsReport.

Success does not come easily to a small business. The UnitedStates Small Business Administration says fifty percent fail in thefirst year. The government agency says ninety-five percent of smallbusinesses fail within five years.

Many owners believe one way to improve their chance of success isto buy an already recognized business through a franchise. Afranchise provides a name and products that people know. One of thebest known franchising companies in the world, for example, isMcDonald's.

A person who wants to start a franchise must pay a fee. Thisamount of money depends on how much the franchising company expectsthe new business to earn. To open a McDonald's franchise costs atleast five-hundred-thousand dollars in fees.

Franchise fees for some other companies are only a few thousanddollars. However, store space, goods and other things needed tooperate a franchise may cost a lot more.

Franchise buyers agree to pay a percentage of their earningsevery year for the right to operate the business. They also mustagree to pay for marketing efforts. A percentage of earnings goes tonational advertising. Another percentage may go to localadvertising.

The franchising company must approve where the new business willbe. The contract agreement will also require the owner to observe anumber of rules. These may restrict where the new franchise can dobusiness. Contracts usually remain in effect for as long as twentyyears.

Franchise owners must be prepared to work hard. But experts alsosay that some companies provide only limited training and othersupport. They say owners should make sure they understand what theycan expect, and what is expected of them.

In the United States there are more than three-hundred thousandsmall business franchises. The Wall Street Journal says franchisesoperate in about seventy-five industries. They produceone-million-million dollars in sales a year. And they employ one inevery sixteen Americans workers.

Franchises are a very big kind of small business. Like any otherkind of business, though, there is no guarantee of success.

There is an International Franchise Association. The Web site forthe group is franchise-dot-o-r-g.

This VOA Special English Economics Report was written by MarioRitter. This is Bob Doughty.