how do i make my business a franchise

What are the Steps to Take to Franchise a 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 successfully franchise your business?

• Present Your Business to Potential Franchisees. After identifying your goals, you may now sell your franchise business model to your prospective franchisees.
• Provide Hands-On Training. If you have a vision for your franchise business, your franchisees must share the same objectives with you.
• Work On the Ground. ...
• Implement The Organizational Culture. ...

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 succeed in franchising your business?

• The success of any business is linked to the level of enthusiasm you bring to the job.
• Enthusiasm brings a level of excitement and energy to the operation that everyone can feel-including your customers and staff.
• Let your staff in on the fun. Acknowledge their good work with recognition or a raise.

How much does it cost to turn a business into a franchise?

How much does it cost to start your own franchise? 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.

How do you prepare a business for franchising?

The following are the steps to franchise your business: Issue your franchise disclosure document. Prepare your operations manual. Register your trademarks. Establish your franchise company.

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 qualifications do you need to own a franchise?

Some franchise requirements to take into consideration may include:Credit score. Minimum credit scores vary by franchisor, but most consider a grade of 680 or higher as ideal.Net worth. ... Available cash. ... Previous industry experience. ... Management experience. ... Total investment required. ... Ongoing costs. ... Training and support.

How does a franchise owner 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.

How do I start my first franchise?

Steps to Start a FranchiseStep 1: Research your options. ... Step 2: Select a franchise that aligns with your business goals. ... Step 3: Create an LLC or a corporation. ... Step 4: Arrange financing. ... Step 5: Talk to the franchisors and franchisees. ... Step 6: Talk to members of your community. ... Step 7: Create a business plan.More items...•

Can a franchise make you rich?

The bottom line is that while a franchise can make you independently wealthy, it isn't a guarantee. Choosing the right business in the right industry, and going in with preexisting entrepreneurial experience and/or existing wealth can help, but your income-generating potential may still be somewhat limited.

Can anyone be a franchisee?

What Qualifications Do Franchise Owners Need? It's important to have some type of work background when becoming a franchisee. You should have worked in customer service, management, or any number of careers before you can move forward with your own.

What type of franchise is the most profitable?

Most Profitable FranchisesDunkin'7-Eleven.Planet Fitness.JAN-PRO.Taco Bell.Orangetheory Fitness.Great Clips.Mac Tools.More items...•

Is it possible to open a franchise with no money?

It's not possible to start a franchise without any money. You'll need to pay an initial franchise fee, and you will have other start-up costs. Furthermore, franchisors want to see that you have some skin in the game in the form of a down payment.

Can you open a franchise with no experience?

Most people don't realize that they can have all of this and more through their own franchise. The best part is that there is no experience or education necessary to owning your own franchise. The only thing that is required is a drive for success.

What are the disadvantages of franchising?

Buying a franchise means entering into a formal agreement with your franchisor. Franchise agreements dictate how you run the business, so there may be little room for creativity. There are usually restrictions on where you operate, the products you sell and the suppliers you use.

What 3 factors should you consider before franchising or buying a business?

What Should I Consider Before Buying a Franchise?The type of experience required in the franchised business.The hours and personal commitment necessary to run the business.The track record of the franchisor, and the business experience of its officers and directors.How other franchisees in the same system are doing.More items...

What are the factors you should consider before developing a franchise?

Ten Things To Consider Before Buying A FranchiseIs there strong consumer demand for it? ... Are there many competitors? ... Is the product or service of outstanding quality?How does its quality compare to the competition?Are you confident you can market the franchisor's product successfully in your marketplace?

Do franchise owners make money?

Although franchisors cannot forecast income, as a franchisee, you can definitely make money. It’s important to assess your costs regularly and make...

Are franchise fees paid yearly?

Franchise fees are usually on a monthly basis. The fee is a percentage of your revenue, and the royalties can range from 4% to 12% per year.

How much does the average franchise owner earn per year?

In a study from Franchise Direct, the average franchise owner makes $80,000 a year before tax. However, the range of income is quite large: anywher...

What kinds of franchises are available?

In general, there are three types of franchises available: business, management and product distribution. A business franchise gives you the rights...

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.

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.

What is the first stage of franchise development?

Stage 1 – The Franchise Development Stage is the franchise development stage where you take the legal and business steps necessary to call yourself a franchisor and start selling franchises. During the franchise development stage, major milestones include developing and issuing your FDD, preparing your operations manual, and competitively benchmarking your franchise offering relative to your competitors.

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 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.

How much does it cost to start a franchise?

Franchise costs vary widely depending on the industry and business you choose to invest in, not to mention where you live or plan to do business.

What to do if you don't have a franchise?

If you don’t have the initial investment costs at the ready, you may need to tap into outside financing to launch or run your franchise. Many banks, the SBA and franchise-specific lenders offer financial help for would-be franchisees. Other options include crowdfunding or lenders based entirely online.

How long do you have to get a copy of your FDD before signing a contract?

The franchisor is required to provide you with the FDD at least 14 days before you sign a contract, though it’s a good idea to request a copy earlier in your initial phases of research. You can typically download a PDF of the FDD, though some franchisors might be willing to send you a hard copy. 5.

How to get a copy of a franchise disclosure document?

Reach out to the franchisor for a copy of its franchise disclosure document (FDD), which contains detailed legal information about its franchise group along with financial data like the average gross revenue of its locations.

Why do you need a business plan?

A business plan is necessary if you plan to apply for a loan to help with startup costs. Lenders want to know that you have a viable plan for turning a profit and sustaining your business over the long haul, because it helps them evaluate whether you’ll be able to pay it back.

How long does a franchise contract last?

Franchise contracts come with terms of five to 20 years. At the end of the term, you can often choose whether to renew the contract or discontinue your franchise. At contract signing, you’ll likely need to also pay any upfront fees or initial investment expenses.

Why is my business being audited?

There’s also a higher chance than usual that your business will be audited, because the IRS views ROBS as a tax strategy — basically, a way to avoid paying taxes.

What is franchise support?

A support network among other franchisees stepping up to help each other. It is not just one person out there running your business, but a group of business owners, all part of the system. The result is a culture of like-minded people is created.

What is a franchise operations manual?

A Franchise Operations Manual that houses all your best practices, procedures, “know-how” and various pieces you will end up giving to your franchisees that will help them when operating their business (read about the franchise operations manual); and

Is a franchise fee a source of revenue?

The franchise fee is part of how you will make money franchising (see more on how the franchise fee is determined). Needless to say, the franchise fee is not your main source of revenue.