Starting a Franchise

Obstacles to Overcome When Starting a Franchise

Obstacles to Overcome When Starting a Franchise

Starting a franchise is a great alternative to starting a business from scratch. You get the benefits of an established brand and a proven formula for success. But that doesn’t mean that it’s easy – entrepreneurship of any kind always has obstacles to overcome.

Here we’ll discuss some of the roadblocks you might face and how to handle them.

Selecting the Right Franchise

The first hurdle is deciding which franchise to start since there are thousands of options to choose from. You should choose one that’s in an industry that interests you, but you also need to consider other factors.

You’ll first want to research the industry to find out if it’s declining or growing, what trends are happening, and what the future of the industry might look like. Such information is fairly easy to find with a little online research.

Once you’ve chosen an industry, you need to pick a franchise in that industry. Considerations include the track record of the brand and the direction that it’s headed. You also, of course, need to consider the costs of that franchise. For example, a McDonald’s franchise might be out of reach, but you may be able to afford the investment that a Subway requires.

You also need to make sure that your chosen franchise aligns with your personal interests, skills, and long-term goals. 

Location and Market Research

Once you’ve selected a franchise, you’ll need to do some research into your market to assess how that specific franchise will perform in your area. If the franchise is already operating in parts of your city, you should assess how well they are performing. 

If not, look at similar businesses that you’ll be competing with to understand their performance and target market. 

Another way to assess demand for the franchise’s products or services is to conduct local online surveys, and also just ask people that you know if they would be customers. 

Then you’ll need to find a location for your facility. The franchisor may have specific requirements when it comes to location and may have to approve your selected location before you can move forward. 

You need to look for an area where you’ll have little competition and where you’ll be able to find your target market. For example, if families are your target market, you’ll need to find a family friendly area with plenty of residential neighborhoods. 

You’ll also need to find a location where you’ll be legally allowed to open that specific franchise. If you’re looking at a rental space, you’ll need the approval of the property owner. 

Financial Considerations

One of the biggest challenges with opening a franchise is financing the initial costs involved. The franchise fee is often the largest expense, and can range anywhere from $10,000 to millions, depending on the franchise.

Other costs that you may incur include:

  • The physical location, which may be land and the construction of the facility, as well as the preparation of the facility. However, some franchises don’t require a newly built structure, and can instead be opened in a rented commercial space.
  • Equipment and furniture
  • Insurance
  • Legal fees and business entity costs, such as LLC filing fees
  • A marketing budget
  • An operating budget

Some franchises require that you have a certain amount of liquid capital to fund the operations of the franchise until it reaches profitability. 

The franchisor will often provide you with an estimate of the total startup costs so that you know what you’re getting into. 

If you don’t have all the funds required, bank or SBA loans may be an option. Some franchisors work with specific lenders who can help you to get the required funding. Investors may be another alternative option to fund your franchise as well. Keep in mind, though, that you’ll have to have some skin in the game from your own financial resources. 

To obtain financing, you’ll need a solid business plan with financial projections. The franchisor may be able to assist you with developing the plan. 

Legal Considerations

When you purchase the franchise, you’ll be signing a franchise agreement, which is a complex legal document. It’s highly advisable to have an attorney review this agreement so that they can explain its provisions and details to you, and to make you aware of any potential issues.

You’ll also need to ensure that your franchise complies with all local and state regulations, such as zoning laws, and license and permit requirements. Again, your attorney is your best resource for advice, although the franchisor may also offer support in this area.

Hiring Employees

Your franchisor will likely provide you with a sample staffing plan so that you’ll understand your team needs. They may have specific requirements for position titles, the number of employees, and hiring standards. 

Franchisors also often offer training support and resources for you as well as for your team. 

Marketing and Branding

The franchisor will likely provide you with resources and guidance for marketing and branding your franchise, and you should incorporate what they offer into your own marketing strategy and plan. Every market is different, so you’ll need to understand your specific market and what strategies will be most effective. 

Analyze competitors that are successful to see what local strategies they use to bring in business.

Most new franchises can benefit from holding a grand opening event, so you should design one that will be effective for the type of business you’re opening. Some sort of discount for the first X number of customers can be effective. 


Starting a franchise is not getting a pre-packaged successful business – it’s a challenging process that involves many hurdles. When choosing your franchise, consider what support the franchisor offers in overcoming these challenges, and make that a factor in your decision. The more support you get, the better your chances of success. And if you find success with one franchise, perhaps more locations are in your future! 

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