Knowing how to purchase a franchise and set up a business plan can make or break your success as a franchisee. Understanding the nuances of buying a franchise can seem to be a barrier to entry for some aspiring franchisees. But franchising is nothing to be afraid of and can be quite a rewarding venture. We’ve broken down the franchise process so you know exactly what to expect when opening a franchise of your own.
Identify the goals and objectives you hope to reach. This will guide your decision when choosing a franchise and when crafting a business plan.
Know Your Budget and Goals
It’s vital you know exactly how much you are willing and able to invest. This will also help you determine what type of franchise and what management strategy might be best for you. When deciding to move forward with a franchise, you will need to have a plan to fund the initial investment.
Do Your Research
As with any investment, you should be well aware of exactly what you’re buying and the terms of the agreement. The extent of your research should factor in the franchises you can afford to purchase. Determining your budget before this stage is vital.
Consider the franchise fee, product or service being sold, net worth and working capital requirements, and franchise location options. These can all dictate whether or not a particular franchise business model is a good fit for you.
Consult with other franchisees about their experience prior to making a commitment. This will give you a better understanding of the company culture, earning potential, and any concerns or roadblocks that may arise. Being well connected with both the franchisor and other franchisees can aid in the successful operation of your franchise. Having a strong network and first-hand experience from others can allow you to learn from their mistakes and successes.
Prepare for the Interview Process
Interviews are crucial to understanding the company culture and franchise requirements. Be prepared with questions and take advantage of this process. Learn as much as you can about the franchise opportunity before you commit to being a business owner.
The Franchise Agreement
The agreement sent by the franchisor to the franchisee governs all the legal and financial obligations of the franchisee. It’s important to read this document carefully and consult with specialist lawyers if required.
The franchise agreement details payments, terms, supply chain, privacy, accounting, employee requirements, software, and property (if being leased from the franchisor). There may also be an assignment section that will specify exit plan options as well as a non-compete clause.
This agreement will also lay out all of the forms of support that the franchisor will offer. Support includes territory selection, real estate and build-out, business coaching, training programs, marketing, and so much more.
Franchise agreements often expire after five to ten years. At this point, you will need to renew the agreement and continue the operation of the business.
Being a part of a franchise system provides you with countless resources. Franchising sets you up for success when starting your business, through your grand opening, and as you grow your business. Check out some more information on the franchising process from the International Franchise Association.
As a franchisee, you get to experience the best of both worlds. Franchising allows you to be in business for yourself, but with the full support and backing of a successful, knowledgeable company. Your franchisor and their partner companies will be an ongoing resource for you. They will provide you with ongoing opportunities to scale your business and expand your revenue.
For more information on opening your own franchised business, read more here, or contact us for more information.