Franchising is a business expansion method where a franchisor and a franchisee enter into a joint venture. The franchisor, the primary owner, gives the franchisee rights to sell their products or services using their business model, brand, and other procedures. Franchises can fall into any business category, but it’s crucial to do diligent research on the industry before plunging in. Some of the most profitable franchises include fast food cafes and restaurants, convenience stores, branding and marketing solutions for companies, clothing and tailoring stores, etc. You can check here for a perfect example of a franchisor you might want to consider.
Although the franchise is almost always used to describe the business itself, it typically means the binding contract between the franchisor and franchisee. There are many advantages accruing to a franchisee in such a deal. The most notable is that the parent company already lays out a business plan, and they only have to implement it. However, the business plan is out of your way doesn’t mean you won’t have to put in significant time and energy for the remaining steps. Read on to learn the 10 steps you should follow when starting a new franchise.
Consulting with an expert at Franchise Clues during this process can be extremely beneficial, as their knowledge and experience in the franchise sector can offer insightful information on local market conditions. You may better grasp the competitive landscape, spot possibilities for distinction, and adjust your business plan as necessary by making use of their knowledge.
Step #1: Do Your Due Diligence
After identifying what franchising entails, you should conduct more in-depth research on specific business types. You should do this within various industries you would love to consider. Some of the things you should know in detail include your target consumers, your budget, rules & regulations surrounding the business, and any other relevant thing. Your due diligence procedure should help you identify and narrow down available prospective franchisors.
Step #2: Settle On A Franchise
The research should expose you to various industries you would like to have your franchise. Before making a final verdict, it’s crucial to ensure that your business goals & interests are in line with a prospective franchisee. The franchise should suit your finances, management style, and personal preferences. Once you’ve settled for a particular franchise, learn everything about its terms and conditions. The best place to get the most relevant information is their website. Only let them know of your interest once you’re done and satisfied with your background check.
Step #3: Register An LLC Or Corporation
A majority of franchisors will likely want to work with a corporation or LLC. Learn how to do this and get to it as soon as possible. Even without the franchisor insisting, it is a great way to legally steer clear from liability by separating your business ventures from your assets.
Step #4: Get Your Financing Together
It’s now time to ensure your finances are in order. Know the number of liquid assets, net worth, and credit score to know if you are pre-qualified to buy a franchise. You can involve professional lenders specializing in franchising deals to understand your financial situation better. There are many options to source for franchise funds you might want to consider. Some of the most common include loans from friends and family, crowdfunding, commercial bank loans, alternative lenders, and many more.
Step #5: Meet The Franchisor And Other Franchisees
There are many ways to meet a prospective franchisor. You can reach them out through their official communication lines, through their website, or by attending their discovery days. At their discovery days, you’ll meet various executives from different departments and interact with other prospective franchisees keen to learn more about owning a franchise. You’ll also learn more about the corporate’s mission, vision, and other values.
Step #6: Engage your Community Members
If your business franchise will have a physical location in a particular town or neighborhood, it’s a great idea to first talk to community members to know their opinions. This will let you know if most are warming up to the prospect of a new business like yours in their area. It’s also a great idea to make them aware of your business early on and potentially start gaining customers.
Step #7: Attend Franchisee Training
You’ll now be required to take all the necessary training your franchisor provides. The program’s duration and timing will vary depending on your franchisor’s needs and expectations. However, they usually fall just around when preparing final arrangements like leasing a store or other premises.
Step #8: Work with Professionals
Although you can go through most of the processes alone without a franchise broker, it’s advisable to have a franchise attorney to represent your best interests along with the deal. You can also have any other relevant professional depending on the nature of your franchise.
Step #9: Be Aware Of Business Compliance
It’s pretty crucial to know your franchise and the expected compliance requirements. Depending on your particular franchise, this may include seemingly minor issues such as the space you’ll lease or purchase and its decorations to more complex ones like how you keep your books.
Step #10: Have Your Calendar In Order
The final step is clearing your calendar. You’ll need to be highly organized to effectively manage your personal life and the franchise. This is especially true initially, as things can get complicated before learning all the ropes. You’ll have a lot on your plate as you start. For instance, you’ll need to juggle running the business, attending training sessions with your franchisor, and hiring employees.
