How to Start a Franchise

From definitions through how to join the revolution, here’s your basic guide to starting a franchise.

You’ve spent your whole career working hard to grow someone else’s business. Now you’re ready for something more – something you can call your own.

Starting a business has its risks. It would be nice if you could open a business that already had the bugs worked out. If someone else could make the mistakes and the adjustments before you got there. Then you could launch confidently with a well-oiled machine.

If this sounds good so far, it’s time to consider starting a franchise.

 

What is a franchise?

A franchisee owns a business under a corporate umbrella. The brand-name company is called a franchisor. When you enter into a franchise agreement, the franchisor grants you permission to do business under their name.

Your business is your own to operate however you like - as long as you stay within the sometimes strict guidelines of the franchise agreement. In exchange for royalties, you're allowed to sell products and services under the parent company’s name.

The Franchise Disclosure Document outlines the relationship between franchisee and franchisor.

 

What are the advantages of starting a franchise?

A franchise reduces many of the risks of a new business:

• The business concept has been proven to work.
• Products and services have been market-tested.
• Technical frameworks like HR policies, employee training, and pricing models are already established.
• Customers may be familiar with the brand name, making market penetration easier.
• You may be able to tap into an established library of marketing and advertising assets.

Starting a franchise is not risk free. There are no guarantees in business, and every opportunity has a certain element of risk.

In the 2020 COVID pandemic, a lot of people learned the hard way there are no guarantees in corporate employment, either. As your own boss, at least you are captain of your fate.

Franchisors have an interest in helping you succeed. After all, it’s their name on the line. A franchise lets you build a business for yourself, not by yourself. Your franchisor provides you with training manuals and reference materials. The best offer ongoing training, either at their headquarters or at your location.

Great franchisors set you up for success. Their support ranges from helping you find the right location to helping you attract the right customers.

The best thing about franchising is the potential for long-term growth. Almost one in four of our clients is ready to buy a second location within a few years of buying their first.

 

What kinds of businesses franchise?

When many people think of franchises, the first thing that comes to mind is fast food. Quick-service restaurants are popular options, but they are definitely not your only choice. There are more than 3,000 franchise businesses in the US, covering nearly every industry.

Popular franchises types you might not have considered include:

• Automotive franchises like auto repair, body shops, and detailing
• Beauty franchises like salons, spas, and barbershops
• Education franchises like preschools, swim schools, and tutoring centers
• Home maintenance franchises like landscaping, painting, and junk removal
• Fitness franchises like gyms, yoga studios, and personal training
• Health franchises like physical therapy, chiropractic clinics, and vision centers
• Pet service franchises like grooming salons, training centers, and boarding kennels

A lot of our clients come to us asking to start a specific famous franchise. Having a popular brand name is great and can definitely help with marketing. But believe it or not, you may get a better return on investment from a lesser-known company.

When a franchise opportunity is in high demand, the franchisor has little incentive to offer outstanding support. Smaller franchisors often bend over backward to give their franchisees every chance at success.

Choose your alliance carefully. Base your decision on your interests, needs, and long-term goals, not on whether it’s a company you’ve heard of.

After all, if there is already a location on every corner, how much market share is left for you?

Browse the list of franchisors we work with for more ideas or take a quiz to find out which options are well suited to you.

 

What’s a franchise consultant?

A franchise consultant is an expert matchmaker.

We know the franchisors we work with inside and out. And we know the kind of franchisees who will be happy and successful working with them.

We help you find the best franchise option to make your dream a reality. And we help you avoid the pitfalls that trip up many entrepreneurs who tackle the buying process alone.

 

How much does a franchise cost?

There’s no one-size-fits-all answer. Starting a franchise could cost anywhere from five to seven figures.

Expect to budget for:

• The franchise fee
• Real estate - whether you intend to rent or buy your location
• Equipment and supplies
• Inventory
• Professional services fees – you will need to consult an attorney and an accountant, at a minimum
• Insurance
• License fees, depending on the industry
• Payroll
• Marketing and advertising

The good news is, you don’t need to come up with your full investment right away. There are a lot of financing options to help new franchisees get started.

Beware of “cheap” or “low-cost” franchise opportunities. If it sounds too good to be true, it probably is.

 

 

Buying an existing franchise

How do you start a franchise without startup costs? The term is franchise resale. It’s when a franchisee decides to sell their established franchise business.

Before you dive in headfirst, realize there are two kinds of existing franchises: the kind that makes money and the kind that is barely holding on.

A franchise consultant is a free way for you to make sure you don’t get ambushed by a bad business deal.

 

Start a franchise. Change your life.

Starting a franchise is a life-changing experience. Becoming a small business owner gives you a level of freedom you will never find in corporate America.

If you’re ready to explore the freedom the franchise revolution has to offer, call us for a free consultation.