How to Start a Franchise: 8 Things Every Entrepreneur Needs to Know

One of the best business decisions an entrepreneur can take is to start a franchise. Franchising is when a business allows other entrepreneurs to start a new branch of its store.

This is a great opportunity for both the parent company as well as the franchisee. If you are considering starting a business that is lucrative, you definitely want to know how to start a franchise.

This detailed guide will show you how to start a franchise and what you need to know about running one.

What Every Entrepreneur Needs to Know on How to Start a Franchise

While starting a franchise is a lot of fun, it can also be challenging. It’s imperative that you prepare yourself so that you can run your business successfully.

Here’s what you need to know about starting and running a franchise:

1. Always Research Beforehand

You have to first research the company to see how it works and how much profit it generates. While you may have your personal preference for a franchise – as a customer – you now have to think about what makes sense from a business point of view.

While you should also run a franchise that you want to, it must be worth it financially. You also have to consider the upfront costs. You want to consider what skills are needed for workers. Consider if these skills are something that a beginner can learn or if there are specialized skills that not everyone can master.

You also want to know about the laws, rules, regulations, guidelines, and standards for this particular type of franchise. Will you need to have food inspection checks? Do you need to regularly upgrade your equipment? Always understand these rules and best practices before choosing your franchise.

2. Speak to Existing Franchisees

You should also speak to existing franchisees to hear their experience. If possible, see if you can spend some time shadowing them in their franchise. This way, you will get an idea of how the franchise works. You will also be able to determine whether it’s worth pursuing.

If you have decided to go with the franchise, speak to the company about the next steps. Make sure you look at the franchise agreements, rules, and training to see if it’s feasible for you.

3. Discovery Day

The company will likely have a ‘discovery day’ where new franchisees can attend training workshops on how to run the franchise.

At this time, the franchiser will also get to know you – and evaluate you. They also have to decide whether you will make a great business partner. Make sure you show that you are eager and that you are knowledgeable about the franchise so that they can offer you a contract.

A suggestion is to always ask as many questions as possible. This shows that you are willing to learn and want to be prepared to run a franchise.

4. Hire a Lawyer

You should hire a lawyer when the franchise agreement is given to you. Your lawyer will help you understand the terms of the agreement and can advise you on any negotiations or concerns that you may have.

You should always keep this lawyer by your side. If you run into any issues when running the franchise your lawyer can help resolve any conflicts.

5. Fund Your Franchise

Once you have decided to start the franchise, you need to make sure you have the funding. If you don’t already have the funds, you need to look elsewhere.

You will have to pay an initial amount to the franchiser in order to sign the agreement and begin the franchise. However, after paying this initial fee you will have to look for ways to finance the franchise operations.

One popular method afforded to franchisees is that they can take out of their retirement accounts to fund their franchises. They can do this without incurring any penalty fees.

You can also go to investors. If the franchise you have chosen is a known brand, then it will likely be easier to find investors willing to fund the franchise. This is the time to be creative with funding.

In the early days, you may wish to keep your costs as low as possible and do as much of the labor yourself. This way you can keep the majority of the revenue and spend it on growing the franchise.

6. Pick the Right Spot

One of the biggest mistakes that novice franchisees make is that they don’t pick the right spot for their franchise.

You want to choose a location that will immediately draw in customers. For example, if you are running a fast-food restaurant, it may work on a busy street as opposed to in a shopping mall.

You also want to make sure it isn’t near another branch of the franchise that has been around for long. You are unlikely to win over customers from one branch to your own branch.

7. Market the Franchise

Once everything is set up, you are ready to prepare for opening day. To do this, you need to market the franchise aggressively. We suggest looking into these franchise marketing services to help you.

This is the time to tell all of your friends and family. This is the time to market on social media. If you can reach out to a community that would be interested in your franchise, do so now! If your franchise sells fitness supplements, for example, you should go around to every gym and promote it!

8. Offer Great Service

So on opening day and every day subsequent to that, you need to work on continuously developing your franchise’s image. Customers need to be convinced that they should come to your branch as opposed to another branch.

This will happen by offering great service. You need to master customer service – whether that is being polite to customers, sharing knowledge about your products, or offering great deals and discounts. Always strive to make your franchise stand out.

See You On Opening Day!

Now that you know how to start a franchise, you’re ready to take the steps to open your own franchise. By following these steps, you’ll find success in opening the best franchise there is!

Be sure to read more great content on business and entrepreneurship.