After you have decided to start a franchise business, there are several steps to starting a franchise. You need to plan this process in advance, from choosing a store to obtaining a license and reserving space to comply with the standards of the franchise headquarters.
Here are eight steps to starting a franchise.
1. Research Franchise
You can find franchise opportunities on websites such as Franchise Direct, which categorizes franchises by industry, work-from-home, and low-cost franchises.
Here are some key points to keep in mind when choosing a franchise opportunity:
Industry fees Liquid capital required Average monthly/annual revenues Royalty fees Marketing fees Other fees
2. Evaluate the opportunity
Before starting a franchise business, you need to make sure that there are no franchise businesses already in the area. Some businesses, like Dunkin Donuts, can have an entire city, but you need to make sure that you don't locate in a location where you might be less competitive.
3. Evaluate costs
If you're considering starting a franchise business, you'll need to figure out a few different costs. In addition to the regular business costs like rent and maintenance, you'll have to pay royalties to the franchisor every year.
Other expenses include travel expenses, company training fees, paying local taxes to start your business, etc.
4. Create a business plan
Many aspects of the business are already defined, but you are the one in charge of the most important aspects of your business. When you write your business plan, you can outline why you will be the strong manager of the business.
It's also important to explain how you understand the community you want to serve in your store. You're the expert, and that will be helpful to the franchise as a whole.
5. Obtain a franchise license agreement
The franchisor will provide you with a contract to run your business. Before you sign, read the contract carefully to understand all the standards expected of your store. It is important to know what business standards the franchisor has set for its franchisees and make sure you won't have any problems with adhering to them.
6. Set up a business entity
Once you have a business plan, you can start your business by forming an LLC or a corporation. Franchisors require different business entities based on their overall structure. Either way, these entities will allow you to categorize your business expenses.
7. Choose your first business space
Once you're ready to start operating your business, it's time to find a headquarters for your business. Your franchisor should provide you with guidelines on what kind of space you need in terms of size and setup. If it's a restaurant, they should also have specifications on the equipment and amenities you'll need to make the space fit your overall brand.
8. Hire employees
Once you have signed a contract and a location, you can start looking for employees. The franchisor has probably already set up job descriptions and titles, so it's easy to post jobs and start looking for good employees. Franchise owners may also have an internal job posting system in case they have employees looking to transfer to other franchise locations.
Conclusion
Starting a franchise business requires just as much effort as starting a business from scratch. Working with a franchisor gives you the space to focus on the important aspects of your business; the big picture is already complete.