Frequently Asked Questions
There are 3 types of franchise owner out there:
- The active owner and operator
- The executive/absentee
- The semi-absentee
- Understand what’s needed of you so there are no surprises.
- Always seek improvement through self-education and training.
- Prepare! Those that are prepared for the best and worst always come out on top.
Franchising involves the franchisee paying franchise fees for the use of a franchised brands name, products or services. In exchange, the franchisee can use the brand name and receive ongoing support in areas such as the operation of the business, financing options, and marketing.
- Establish your goals in alignment with the franchisors.
- Show commitment to the long-term success of the franchise.
- Describe your plans for financing the franchise.
Myth 1) Being in a franchise requires a huge investment and loads of money.
Myth 2) Buy a franchise in an area you’re passionate about.
Myth 3) Franchising only applies to fast food businesses.
The Canadian Franchise Association has the mission of promoting ethical franchising throughout Canada. The CFA helps everyday Canadians with the dream of building their own business, set up through the power of franchising.
In order to become a successful franchisee, it’s vital you do your due diligence. Many franchisees indeed have higher success rates compared to beginning a typical start-up. However, starting a business and managing a franchise still requires key traits to separate you from the rest.
A franchise business plan consists of a few key components, these include an executive summary, business description, management summary, and sales/marketing overview.
Pros: Lower risk involved, and you can become your own boss.
Cons: Limited creativity and often high initial investment.
- Having a prime location to sell from.
- Access to a good level of support.
- No legal troubles.
- A job franchise, usually operated by a single person with low investment requirements.
- A business format franchise, the franchisee has access to the entire system and trademark to operate the business.
- Investment franchise, usually on a larger scale requiring much more up-front capital.
As a franchisee, you will receive this document 14 days before paying any franchise fees or signing any contracts. The Franchise Disclosure Document provides guidelines with the aim to assist new franchisees with the franchise system. As a franchisee, you will gain a better understanding of the franchise business along with an opportunity to review the FDD again after.
Franchising resolves around buying into a brand which a franchisor has already set up. Therefore, it’s easier to get selling and generally less risky, however, you are limited in creativity. Entrepreneurship involves starting a business from the ground up, you have full creativity and choice, but it can be riskier.
The first part to opening a franchise with little money is to thoroughly understand what you are getting yourself into. This resolves around the contract. Many franchise opportunities will require good credit and an initial investment, yet some can be home-based and started with no money down.
- Cash, if your net worth allows for it then cash can be a great way to finance a franchise.
- 401(k) Business Financing, this involves funding your franchise by tapping into your own 401(k), IRA or other retirement accounts.
- Traditional Loans, this involves going to the bank or a credit union for a loan to secure financing.
When it comes to selecting a franchisor, there are a few important points to consider. Firstly, the franchisor should have a good amount of experience along with a strong level of communication, so you are never left in the dark when it comes to your franchise.
Buying a franchise may be better than starting your own business for a few reasons:
- Reduced risk when buying into an existing business with a reputation.
- Ongoing support, advice, and training is given so you aren’t left confused.
- Much easier to get going with a turnkey operation.
3 of the best resources for franchisees include:
- A professional network to rely on
- Marketing automation to separate yourself from the business
- A high-quality printer for your material