Purchasing a franchise gives you the chance to succeed in business without making all of the mistakes that come with starting from the very beginning. You benefit from the experience of and support from a franchisor. While a few of the particulars vary from one industry to another, the steps involved in opening a franchise can be boiled down into a set of essential stages.
The steps involved may not always occur in a set order, but the outline remains generally the same for most experiences. Each potential franchisee should set out to complete each phase in a time frame that feels comfortable to them. Franchisees should also be prepared to reach out for support while pondering franchise business opportunities. Here are some of the key steps to take when opening a franchise.
Do Some Self-Reflection
You should be asking yourself a variety of questions prior to and while looking at hot franchise opportunities. This period of self-examination will provide insight into what type of franchise you should be investing in, as well as why you are doing so. Additionally, you will be able to realistically determine if owning a franchise is the right decision for you. Ask yourself questions such as:
- What interests you about franchise business opportunities?
- Are you willing and capable of working long hours to get things going?
- Is working under a set of established rules and regulations appealing to you?
- Are you prepared financially to purchase a franchise?
- What type of franchise opportunities, such as restaurant franchising, are you passionate about?
Once you are confident in your answers to these questions and more, you should be ready to move on to more thorough research.
You should not move forward with opening a franchised business without being sure that your area can sustain it. Are the people in your community interested in and able to benefit from the type of franchise you are considering? Following your gut is important, but taking your potential consumer base into account is also key. Certain businesses, like home improvement franchises, are typically guaranteed to offer something to an area. That being said, ask yourself if the competition for a specific type of franchise is oversaturated. Researching the competition will set you on a solid path.
Reach Out to Existing Franchisees
If you are trying to decide between a few franchise business opportunities to move forward with, consider asking franchisors to provide you with the contact details of some of the current franchisees. You can call them, or even visit their locations, to gain intel as to how satisfied they are working with a franchisor. You can also assess whether or not the lifestyle they are living suits your individual goals.
Pick a Franchise Opportunity and Obtain Capital
Once you've completed research and spoken to other franchisees, you can make your choice about what franchise you will move forward with investing in. After making your confident decision, the franchisor should have given you all of the needed information and documentation to secure any additional funding that you require. Should you need it, you can attempt to receive funding from bank loans, personal loans, or government loans provided to small businesses. You will need money to cover expenses until your business begins to profit, which can take time.
Sign Your Franchise Agreement
Your franchisor should send over a franchise agreement for you to sign. Do not make the mistake of signing too quickly. You want to be thorough so that you are not surprised down the line about specifics such as financial parameters, regulations set by the franchisor, and more. Should you find yourself confused with some of the jargon being used, it is wise to speak to a business lawyer who is experienced in franchises. Most franchisors set realistic and sensible conditions, but having a legal entity there to read the fine print can offer peace of mind to you as an investor.
Secure a Location
Though some franchises provide you with the opportunity to work from home, many will require you to find a space for your operation to run out of. You want to be careful when choosing a location. You want to pick somewhere that is suitable in size for your franchise, nearby to your customers, and safe to work from. Your franchisor will most likely map out a boundary for you to choose from and may even aid you in selecting a spot. The previous successes and failures had by your franchisor will serve to inform your decision.
Acquire the Required Insurance and Permits
Every franchise industry comes with its own set of necessary insurance and permits. In addition, each town, city, county, or state will have differing requirements for how your business needs to be legally run. This specific information will most likely be provided by your franchisor, though it may be up to you to complete a majority of the paperwork. You should, however, be sure to conduct your own research into local laws so that you know you're acting in accordance. In terms of insurance, you may have to invest in:
- Product liability insurance
- Employers' liability insurance
- Property damage liability insurance
- Business interruption insurance
- And more
Hire a Staff and Take Part in Training
According to Statista, in 2020, there were nearly 7 and a half million people who worked for a franchise business. The size of the team that you hire will largely depend on the type of franchise you are running. As your own boss, you get to hand-pick a trustworthy and dedicated staff to aid your business in reaching its potential. You will also be taking part in, and having your staff take part in, training provided by your franchisor. How extensive this training is will depend on your franchisor. A manual detailing the crucial operations will also be provided.
Open for Business
Your research and training are complete and you are ready to open your franchise to the public! You will have to make your community aware of your franchise's presence. Your franchisor may give you marketing materials such as signage, ad copy, and more to get you going. Whether you conduct a soft launch of your business or a grand opening will depend on if your franchisor has set expectations. You now have the knowledge, the tools, and the staff to get you to where you need to be and you are on the path to success.
Ready to get started with a franchise business opportunity? Use the resources offered by Franchise Recovery to help you on your journey! We look forward to helping you find the perfect business for you.
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