Are you ready to take your first steps into franchise ownership – but unsure where to start? With thousands of opportunities available, across hundreds of niches, there’s plenty to choose from. Starting a business isn’t easy, but opting to go down the franchise route stacks the odds in your favor.
Of course, the journey looks much different for franchisees than it does for independents. Some franchise brands take care of all the peripheral aspects – by providing a tried and tested business model, hooking you up with their preferred vendors (sometimes with exclusive access and discounts), offering marketing guidance, extensive training, and ongoing support.
It’s not a case of any franchise will do. Before you begin your research, and while you are researching, it’s important to consider what matters to you and where your passions lie. Not all franchises offer the same level of support, while potential financial rewards vary to the extremes as well. To help you navigate the complex world of franchising, we’ve compiled a franchise step-by-step guide to help you as you begin your journey.
How To Start a Business Step-By-Step Guide
Unlike an independent operation, a franchise is a business network where you, the franchisee, pay a capital investment in a brand and in return receive the benefits of working alongside one of the top brand names in your industry. Franchises are popular because they offer an established support network while enabling you to grow your own business.
There are quite a few considerations to be conscious of when opting for a franchise business. That’s why it’s a good idea to get an overarching knowledge of the application process, expectations, and obligations before you sign any contracts or hand over your cash.
As with any business, it’s imperative that you conduct thorough research for both the necessary steps to set up a franchise, as well as the ongoing obligations you will have to the franchisor (the company you join as a franchisee). Other research will include the best location of any physical buildings, sourcing a building, and discovering local interest in the franchise(s) you are considering.
It may be in your best interest to work alongside a professional franchise consultant with specialist knowledge and experience in how to set up a franchise business in the US. Though this does cost a fee, having a mentor to guide you and help you will prevent you from making the most common mistakes among potential franchise candidates.
Steps to Choose the Best Franchise
You may have a lifelong dream to own and operate a fitness franchise in your local community – but if there are more fitness centers in the vicinity than there are potential customers, then it may be best to go back to the drawing board.
During the research phase of your journey toward becoming a franchisee, it’s necessary to consider multiple factors before deciding if it will reap the rewards you desire. Factors to consider include:
- Specific franchises offered within your industry,
- Financials – initial capital, average revenue of similarly-located franchises, ongoing fees and royalties, insurance, equipment costs (if applicable),
- Market – potential customers, location, projected trends,
This list is not exhaustive but rather demonstrates that the more knowledge you have before making any commitment, the more likely you will be to make an informed decision.
You can use franchise portals and visit franchise websites directly to compare and contrast the initial start-up costs, as well as the value of the support offered in the beginning and beyond. You can narrow down the list of options by staying cognizant of your budget, brand values, and potential for success. A franchise consultant can be of great help here, by utilizing insider knowledge and extensive experience to help home in on the perfect option for you.
Steps To Set Up a Franchise: A Guide to The Financials
Whether you’re setting up an independent venture or opting for the more supporting franchise route to business ownership, you will begin with a set budget. This may be your own capital or via a start-up loan. It’s important to stay within the boundaries of this to prevent impacting your financial stability.
Once you have a solid idea of your upper limit, you can analyze the franchise opportunities on offer. Remember to keep in mind that you will need some liquidity to maintain your fledging franchise at the start. Next, you can determine whether the proposed franchise package is robust enough to justify the initial cost. You will discover that some offer far better value for money so it may even be worth speaking with existing franchisees to get a feel for their experience, and to understand if this is something that would help you reach your financial goals.
You might be starting a franchise to supplement your current income while you work, you may be looking for a way to challenge yourself in retirement, or perhaps you want the freedom to throw in the 9-5 towel and operate on your own terms. It’s necessary to understand what your goals are to ensure that you choose a franchise opportunity that will most likely help you reach those goals.
How To Do a Step-by-Step Guide for Due Diligence
Paperwork can be complex for setting up a franchise business. It’s going to involve a lot of reading – especially to understand if the brand is in a good place financially and socially. This will serve as a way to assure you of long-term stability, and therefore a safe investment for your capital.
First, read the Franchise Disclosure Document, this aims to give you an overview of the franchise and its financial situation. Franchisors (the business) are keen to make a great impression on potential franchisees (you). Many brands have a recruitment package containing videos, articles, and presentations – these will help you get a better impression of the company’s values as well as its operational procedures. Collectively, these will help you determine which brand is the right fit for you.
Speak with the franchise representatives, as well as existing franchisees, to help you make up your own mind on whether this is a suitable opportunity. Remember, not all details are included in the marketing pack so speaking with someone with lived experience can contribute to a better understanding of what awaits you.
You can meet with the franchisor in person by arranging a discovery day. This is your opportunity to ask questions. Prioritize questions about the financial implications, post-purchase support, and company values. These three topics will have an impact on your day-to-day life for the foreseeable future, therefore their answers must align with your expectations and desires.
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