Opening a franchise is one of the most rewarding and profitable ventures you can undertake as an entrepreneur. But like any business, proper planning and organization are necessary to ensure the success of your enterprise. These helpful tips will help you get on your way to learning how to start a franchise business.
Set a budget
When you start your franchising business, the first thing you’ll have to do is pay a one-time upfront franchise fee. Some franchisors also require you to have a certain financial requirement to allow you to open one of their franchises. Once you decide you want to start a franchise business, it would be wise to go over your personal finances and assets first. Set a strict budget to save up for or set aside, and then proceed to look for opportunities that fit in with what you can afford.
Do your research
A franchisor-franchisee relationship is a partnership. You need to be extremely selective when choosing which franchise to partner with. Besides learning about different franchise opportunities, it would be helpful to learn about the business of franchising in general. This includes figuring out how franchising works, what you can expect, and how to make the right selection. Try asking yourself these three questions when making your decision:
- What type of franchise business would I like to own (e.g. food business, retail, technology, etc.)?
- What is the cost of the franchise and am I financially capable of covering these expenses?
- What are the franchise’s internal policies and regulations and do these align with my management style?
Meet with franchisors and other franchisees
Reach out to other franchisors and franchisees and ask many questions. They’re valuable sources of firsthand information who can paint a picture of what owning a franchise is actually like. There’s no limit to how many you can speak to, so make sure you meet with as many people as you see fit. When you’re confident enough to make a deal with a particular franchisor, you’ll most likely undergo an interview with them. These interviews will go over detailed specifics of the franchise and will help you flesh out your plans even more.
Obtain the right funding
If your personal finances and assets are not enough to cover the franchising fees and other expenses, you might want to look into alternative funding options. These options include traditional bank loans, SBA loans, Rollover for Business Startups (ROBS), crowdfunding, or working with angel investors. You’ll need a good credit score to obtain most of these. It’s also helpful to open a business checking account to keep your personal and business funds separate.
Select the best location for your franchise
Depending on what your franchise is, there’ll be some locations more suited to it than others. The franchisor sometimes provides guidelines and recommendations which can help you find the perfect location based on their research and business analysis. They may also have some strict requirements when it comes to the details of the commercial real estate site. Opt for a location with high foot traffic which is guaranteed to boost your sales.
With this in mind, you’re all set to start your very own franchise business. Be diligent and patient and you’re sure to find success in your franchising ventures.