how can i franchise my business

6 Steps to Franchising Your Business

Full Answer

Should I buy a franchise or start my own business?

Buying a franchise is very different from starting a mom-and-pop business. Since there is an already established system in place, there is a higher likelihood of success. If you invest in a proven franchise opportunity and follow the system the franchisor has put in place, you should be on your way to running a successful business.

How to turn your business into a franchise?

• Set Realistic Goals. Franchising is more of a marathon than a sprint. ...
• Research Your Competitors. ...
• Develop Your Franchise Offering for Both Individual and Multi-Unit Sales. ...
• Make Sure Your FDD Is Compliant for Every State. ...
• Learn Franchising and Get Involved in the Franchise Community. ...

How much will it cost to franchise my Business?

There are currently 14 registration states with franchise registration fees ranging from $250 to $750 plus additional legal fees leaving you potentially $15,000 to $25,000 out of pocket. A Federally Registered Trademark will set you back $1,750 to $7,500.

How to start a small business franchise?

When purchasing a franchise, there are four main cost parameters to consider:

• Franchise fee - Virtually every franchise opportunity requires the business owner to pay a one-time, upfront franchise fee.
• Initial investment - Your initial investment covers the materials, labor, and resources you'll need to launch. ...
• Ongoing investment - This is the money you'll need to run the franchise on an ongoing basis.

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Can I franchise my business myself?

You may need to register your franchise according to the state you live in. Some states require registration and a franchise fee, while others require that you file your franchise disclosure document with the state or simply obtain a registered trademark for it.

How do you turn your business into a franchise?

The following are the steps to franchise your business:Determine if franchising is right for your business.Issue your franchise disclosure document.Prepare your operations manual.Register your trademarks.Establish your franchise company.Register and file your FDD.Create your franchise sales strategy and budget.

How much money do you need to franchise a business?

Franchise startup costs can be as low as $10,000 or as high as $5 million, with the majority falling somewhere between $100,000 and $300,000. The price all depends on the industry, location and type of franchise.

Can you franchise a business with no money?

If you don't have the capital to start the franchise on your own, consider bringing on a partner who can finance the project. An investor can be a friend, family member, or even an old work colleague. However, if you choose this route, be aware that you're giving up partial control of the business.

How do franchise owners get paid?

How do franchise owners get paid? Franchise owners can pay themselves a salary or depending on their business entity, they may be able to take a draw from their accumulated equity.

What are the 4 ways to become a franchisee?

4 ways to become a franchiseeFigure out your passion and skill set. Buying a franchise business shouldn't just be about facts and figures. ... Prepare to buy-in. ... Investigate franchise brands. ... Speak to experts and existing franchisees.

What franchise makes the most money?

What is the most profitable franchise to own? According to the Franchise 500 list of 2021, Taco Bell is the most profitable franchise to own. The food chain has been franchising for nearly 6 decades and is still seeking franchises worldwide. As of 2021, they have 7,567 open units.

Do franchises pay taxes?

Franchise taxes are paid in addition to federal and state income taxes. The amount of franchise tax can differ greatly depending on the tax rules within each state and is not calculated on the organization's profit. Kansas, Missouri, Pennsylvania, and West Virginia all discontinued their corporate franchise taxes.

Is it easy to start a franchise?

Starting a franchise is no easy feat. While some of the key risks of starting a small business are eliminated by taking the franchise route, that doesn't mean the process is a walk in the park. However, following the steps above will help you stay on track for this exciting venture.

Can I get loan for franchise?

Small business loans for a franchise from commercial banks Credit unions and commercial banks too offer franchise business financing. However, the process of documentation may test your patience. Your choice institution will study both your personal and business credit scores.

Do you need to be rich to open a franchise?

Initial franchise fees alone may be as low as $10,000 or over $100,000, and together with the costs of opening a business, it could end up costing you hundreds of thousands to millions of dollars to get started. In other words, you may need to have a substantial level of wealth before you can even open a franchise.

Is a franchise a good investment?

If you're a fledgling entrepreneur or a seasoned business person wanting to diversify your holdings, you've probably wondered, “Are franchises a good investment?” The simple answer is yes, especially if a great opportunity presents itself. There is an obvious appeal to starting a business via buying a franchise.

Why should I turn my business into a franchise?

Franchising allows bigger businesses to branch out and grow while giving people the opportunity to run their own business with the help and support of a larger company that has a proven formula for success.

When should you franchise a business?

As a general rule, it's recommended that businesses have at least one to three years of successful operations before franchising. That number could be higher or lower, however, depending on the industry. For some businesses, franchising during the first two years of operations can be advantageous.

What does it mean to franchise a business?

A franchise is a business whereby the owner licenses its operations—along with its products, branding, and knowledge—in exchange for a franchise fee. The franchisor is the business that grants licenses to franchisees.

How do you become a franchise owner?

What does it Take to Become a Franchise Owner?Establish your budget. Determine how much money you are able to pay upfront, and look into funding opportunities as well.Consider your goals. ... Do your research. ... Reach out to the Franchisor. ... Go through the application process. ... Sign the franchise agreement.

Why Should I Franchise My Business?

Your business is strong and thriving, so it is natural to want to expand it . Opening new locations is a lot of work , and it takes time and energy to do it right, which is why many business owners are turning to franchising. Below are the two biggest advantages when you decide to franchise your business.

What can a franchisee do?

A franchisee can spend the time dedicated to building a strong business unit, marketing, finding a site, negotiating a lease, hiring and training staff, and so on without worrying about how other locations are faring. Their focus is on their own business!

Why is franchising important?

The above advantages to franchising prove that it can lead to a more sound and economic expansion, a stronger dedication of franchisees as opposed to managers, and above all a greater potential for growth by having individuals running each location and not having to manage each location .

What is accurate franchising?

Accurate Franchising consultants provide strategic planning, sales support/training, marketing, operations, legal, financing and real estate assistance – all designed to help business owners grow. To provide the personalized and time-intensive consultation required, Accurate Franchising currently limits the program to five clients at a time.

What is the roadblock to expanding a business?

A huge roadblock to businesses that are looking to expand is finding and training a qualified management team. With franchising, you substitute training a manager for training an owner. Franchisees are motivated to work hard because they have made an investment and have a stake in their business’ profits.

Is franchising a good strategy?

Starting a second (or third, or four th) location is a great expansion strategy, but it costs money, man hours, and time. Franchising your business can help you save on these three hot commodities in ways that starting a new location on your own cannot. We certainly do not mean to suggest that franchising is free or easy, but it is a growth strategy that can cost considerably less.

Is a small business a good place to start?

A thriving small business is a good place to start! Your business also needs to be easily replicated in a variety of locations, appealing both to consumers and to potential franchisees. On top of that, it needs to be profitable for the franchisee as well as you, the franchisor.

How Long Should It Take to Franchise My Business?

Typically, franchising your business takes from 90 to 120 days. Depending on unique factors related to your business or industry, there could be variations. A lot also depends on who you are working with and your internal team.

What does it mean to franchise a business?

When you franchise your business it means that you have taken the necessary legal and business steps to sell franchises, support franchisees, and grow your brand. First and foremost, your franchise lawyer will have to prepare and issue a Franchise Disclosure Document that complies with federal and state law.

What Are the Franchise Laws and What Is a Franchise Disclosure Document?

Franchising is regulated and requires compliance with federal and state franchise laws.

Do I Have to Work with a Franchise Lawyer?

If you are going to franchise the right way, you need to work with a lawyer who specializes in franchising and who is experienced in working with new and emerging franchisors like you.

Can a Franchise Developer or Consultant Prepare My FDD Instead of a Franchise Lawyer?

No. Your FDD is a legal document that requires the integration of federal and state-specific franchise laws and regulations and should only be prepared by a qualified franchise lawyer.

How Do I Get Started?

By reading this guide, you’ve already taken the first step! Now that you have a solid foundation as to what franchising is all about and the steps involved, start building the right team to help support and guide you in franchising your business .

How long do you have to give FDD to franchisees?

It’s required by federal and state law and is the legal foundation for your franchise. You are required to give prospective franchisees your FDD no less than 14 days before signing any agreement with a franchisee or accepting any payments from a franchisee.

You Need an Unwavering Franchise Structure

A crucial part of franchise development and expanding your business through franchising is creating an infrastructure and systems that will draw in potential investors. Prospects want to know that your franchise is the best opportunity for them.

There Are Others Just Like You That Have Succeeded

One thing to always remember as you embark on the journey to franchise your business is that you are not alone. We have helped many franchisors answer the question “how can I franchise my business?” and we can help you as well. We can create a plan that accommodates the exact needs of your franchise and even help you with your marketing.

You Have People Who Want to Help You Franchise Your Business

We are here to try and help you franchise your business. Accurate Franchising, Inc. was started over 30 years ago, and we have worked with over 200 brands to get them started as franchises all the way through expanding internationally.

Can I Franchise My Business?

We can work with you right from that initial question all the way throughout the franchising journey. There may be several twists and turns to expanding your business through franchising, but with one of our consultants by your side, you may have all the tools and resources you need to do it successfully.

When evaluating whether franchising makes sense for you as a business owner, it’s important to do some?

When evaluating whether franchising makes sense for you as a business owner, it’s important to do some self-reflection to help determine if your business is in a place where you can mentally and physically commit to stepping out of the daily operations and into more of a management role.

How many hours do you work in franchising?

As you continue through the process of franchising your business, it is imperative that you remain focused. This doesn’t necessarily mean working 10 hours per day, but it does mean being organized and ready to answer any and all questions.

Why do you need to have strong systems and processes before franchising?

Your business also needs to have strong systems and processes in place before franchising because the transition to franchising means adopting a replicable model. As an example, you may think you’re in the pizza business, but once you decide to franchise your concept, you’re no longer making pizza in the shop—instead you’re running a franchise that happens to sell pizza. You’re now required to teach other people how to make the pizza, approve real estate sites, help your franchisees with construction and establish back-of-house operations, meaning the days of exclusive kitchen work, for you, are over.

How many pages are needed for a franchise operation manual?

While most people who have entered into the process have a strong grasp of their business and have overall systems documented, almost no one has a detailed , 200-page, step-by-step manual required to support your franchisees.

Is it a good time to franchise when sales are down?

Simply put, it’s the wrong time to franchise when sales are down. Franchising isn’t a means of turning your business around—the ideal time to grow through franchising is when things are heading in a positive direction. Your business also needs to have strong systems and processes in place before franchising because the transition ...

Is franchising a realistic idea?

That being said, franchising isn’t a realistic means of expansion for every business. Entrepreneurs interested in dipping their toe in the franchise waters should consider several key factors before diving in.

Is franchising a sprint?

It is also critical for business owners to understand that growing through franchising is a marathon, not a sprint. If you’re looking for something fast and easy, this isn’t the proper method by which to scale your business. There’s no instant gratification. As a business owner, you must be prepared to invest substantial capital and time on the front end to establish a system with long-term viability through franchising.

How much did franchises make in 2007?

Franchises accounted for $1.3 trillion in revenue and $153.7 billion in payroll disbursed to 7.9 million workers.

What did Farid do to open a franchise?

To see what might be involved in opening a franchise, Farid decided to do a test run himself, in the form of a second store. He found a building, filed the documents, and went through all the minutiae himself, from interior decoration to training the staff.

How many flower shops did Tariq Farid own?

Tariq Farid had owned four flower shops by the time he was 19. He remembers sitting with his mother, who helped him around the shop, when he was making sixty dollars a day, and he’d tell her of his dream to someday make seventy. When he reached his goal, he turned it in for another dream.

What does Mulgannon say about franchising?

Mulgannon says that if everything's not in order in a company's Item 19, he'll decline to work with them. These legal complications are an area in which the hopeful franchisor may want to seek out professional help. Farid wouldn’t exactly advise anyone to go about franchising their business without expert advice.

Does Farid recommend franchising?

Farid wouldn’t exactly advise anyone to go about franchising their business without expert advice. "I was mostly doing it myself," Farid says of his early efforts to raise money, cut through the legal thicket, and build his trial franchise. “We had no money, and it was tough to go to a bank with a basket of fruit.

Do franchisees have to be precise?

The directions provided to each franchisee will likely have to be precise. Business owners, however, are frequently accustomed to running their companies on intuition, and it may be difficult for them to itemize all the infinitesimal but important obligations they fulfill every day.

Is franchising a good idea?

Franchising your small business may be a good way to grow fast. Figuring out whether or not franchising will work for you is a matter of knowing your business and yourself. The idea of growth is appealing, but a small business owner wants his or her company to scale at a reasonable rate.