So, you want to start a business but don’t know where to begin. While franchising has crossed your mind, you’re still not sold on the idea. Thankfully, you’ve come to the right place, America’s Best Franchises, where we’re all about helping you choose the right franchise opportunity for you.
Here’s How Franchising Works
A franchisor grants the rights to their products and/or services to a franchisee. The two enter an agreement that allows the franchisee to use the franchisor’s methods, operations, systems, brand name and other intellectual property to grow their business. Franchisors often provide ongoing training to support the success of the proposed business model.
Franchising is a great way to jumpstart your journey of owning a business without the hassle of starting from scratch. With franchising, you get to use a proven-to-be-profitable business model with established brand recognition. All you have to do is follow the steps provided by the franchisor.
That brings us back to the question: Where do I begin? Here’s a 10-step guide that answers that very question:
Choosing a franchise opportunity starts with getting to know yourself. Define your goals, interests and strengths; knowing what you want and what you’re good at will help you choose a franchise opportunity that fits your personality and lifestyle.
2) Assess Finances
Just like starting any other business, franchising comes with initial costs, including the franchise fee, royalties, start-up capital and more. Depending on the size and type of franchise, total initial investment costs can range anywhere from $10,000 to upwards of $1 million. Evaluating just how much capital you have to invest can help narrow which opportunities are available to you.
3) Support Matters
Franchising is definitely not a decision you want to take lightly. Depending on the opportunity, it could translate to a huge time and financial commitment. Your loved ones should be aware of the demands that come with owning a business. Consult with your family and trusted friends to ensure you have the support system in place to help you reach your business goals.
4) Browse Industries
Refer to step one: Your goals, interests and strengths should help you narrow industry choices. Try not to limit yourself to only the brands you know because you just might find the perfect franchise opportunity in a surprisingly unexpected industry. (Use a directory site like America’s Best Franchises to search by industry.)
5) Top Picks
This is when you have to start making the tough decisions. You’re going to have to put in a lot of research for each of your top picks in order to optimize your decision, so make it easy on yourself by narrowing your choices as much as possible. Be extremely selective and cross off anything you still have reservations about.
6) Request Information
By this point, you’ve likely skimmed several franchise websites. This time, take a deep dive into each of your top picks’ franchise recruitment sites. See if your values match theirs. Check if they offer the type of support that suits your learning needs. And finally, draft a comprehensive list of questions to ask after you fill out the “Request More Information” form. To make the most educated decision possible, check out our blog about what to ask a franchisor.
7) Study the FDD
Every franchisor is required to provide prospective franchisees with a Franchise Disclosure Document (FDD). An FDD discloses extensive information about the franchise, including a breakdown of the franchise system, company history, executive board history, investment numbers, any and all litigation cases, any bankruptcies and more.
You should receive the FDD at least 14 days before signing the official Franchise Agreement, but many franchisors will provide it if you ask. Most FDDs are 100+ pages, so you’ll want to have the time to thoroughly review the full document.
8) Call Existing Franchisees
The FDD also lists the contact information of past and current franchisees. Here’s where you get the lowdown of the good, the bad and the ugly. Ask past franchisees why they left and current ones why they like the brand. Remember, these are people who have done it for themselves and can identify flaws and strengths you might not be able to just by reading the FDD.
9) Meet the Franchisor
Once you complete the franchise application for your number-one pick, the franchisor will make sure all of your information checks out before moving forward. If it does, the second-to-last step is usually visiting the franchisor’s company headquarters. You’ll meet the executive board in person and begin the training process.
Keep in mind; you could potentially be speaking with the members of the executive team every day, so make sure to establish a strong relationship while you’re there. This is your last opportunity to get a feel for the franchise before making things official.
10) Make Your Decision
You’ve reached the final step before starting your franchise business. All you have to do is sign the paperwork known as a Franchise Agreement. This legally binding contract outlines the franchisor’s terms and conditions, as well as obligations of both parties.
Starting a franchise business is a serious commitment; it’s important to do your due diligence. Here are some helpful links to assist you along the way. Otherwise, there’s no better place to start your search for the perfect franchise opportunity than America’s Best Franchises. Click here to begin your journey.