Buying A Franchise

What is franchising?

According to the International Franchise Association (IFA), franchising is defined as an agreement or license between two legally independent parties.

Why Buy a Franchise?

Buying a franchise comes with the benefit of starting a business with pre-existing brand recognition, processes and plans. In many ways, a lot of the work is already done for you with a franchise, however, that doesn’t mean that buying a franchise is easy.

Steps To Start A Franchise:

1. Research Franchises

You can find franchise opportunities on websites like Franchise Direct. It categorizes franchises by industry, working from home, and lower cost ones.

These are the key points to keep in mind when you’re picking a franchise opportunity:

• Industry fees
• Liquid capital needed
• Average monthly/yearly revenue
• Royalty fees
• Marketing fees
• Other fees

2. Evaluate Opportunities

Before you start a franchise business, you should make sure that one doesn’t already exist in the area. Although there are some businesses that can exist throughout a city, such as Dunkin’ Donuts, you want to make sure you’re not setting up a competitive location that could underperform.

3. Evaluate Costs

When you’re looking into starting a franchise business, you’ll have to be on top of a few different costs. In addition to regular business costs such as rent and maintenance, you have to pay a yearly royalty to the franchisor.

Other costs include travel, training with the company and paying some local taxes to start your business.

4. Draft a Business Plan

Even though many aspects of the business are already defined, you’re in charge of the most important aspects of the business. When you write a business plan, you can outline why you would be a strong steward of the business. It's also important to explain how you understand the community you wish to serve with your location. 

5. Franchise License Agreement

The franchisor has a contract that they provide to franchisees in order to run the business. Before signing, make sure to read it over and understand all of the standards expected of your location. It’s important to know what business standards the franchisor has for franchisees, and make sure you’re comfortable with upholding the business.

6. Form a Business Entity

After you write your business plan, it’s to form a corporation to get started. Franchisors require different business entities based on their overall structure. Either way, these businesses mean you can start categorizing your business expenses.

7. Choose Your First Business Space

When you have the business operations in place, it’s time to look for a business headquarters. There are probably guidelines from the franchisor about what kind of space you’ll need in terms of size and setup. If it’s a restaurant, they also probably have specifications about appliances and amenities needed to keep the space in line with the overall brand.

8. Hire Employees

Once you have your agreements and a location in place, you can start looking for employees. The franchisor probably has job descriptions and titles set up already so it’ll be easier to post the job openings and start searching for good employees. The franchise owners might have an internal job posting system as well, in case there are employees at other franchise locations looking to relocate.

To conclude: In franchising location is very important. You have to physically go and inspect your business location before you put your business there to see if it will be right for your brand and services.