How to buy a franchise, step by step
- 1. Be sure about your reasoning. ...
- 2. Research which franchises you may want to own. ...
- 3. Begin the application process. ...
- 4. Set up your “discovery day” meeting. ...
- 5. Apply for financing. ...
- 6. Review and return your franchise paperwork very carefully. ...
- 7. Buy or rent a location. ...
- 8. Get training and support. ...
Full Answer
What to know before you buy a franchise?
If you’re interested in franchising, you should explore the following:
- Any and all existing reports: Now’s the time to put your detective hat on. To start, get a Uniform Franchise Offering Circular (UFOC). ...
- Associated rules and regulations: Every franchise is different. ...
- Contracts: The contract between the two parties usually benefits the franchisor more than the franchisee. ...
What are the steps of buying a franchise?
- Matches your financial resources
- Provides you with the lifestyle you imagined
- Uses your particular skills and experience
- Provides a recession-resistant product or service
- Has a majority of happy and successful franchisees
- Employs an experienced and enthusiastic staff of personnel who will help you achieve your dreams of business ownership success
What do you need to know about buying a franchise?
Ten Things To Consider Before Buying A Franchise
- What's the story on the franchisor's business record and reputation?
- Have you spoken to existing franchisees?
- Have you contacted government consumer protection agencies, Canadian Franchise Association and your local Better Business Bureau?
- Is the franchisor's infrastructure comprehensive and stable?
What is a franchise and should you buy one?
A franchise refers to a system of doing business in which a parent company (the franchisor) sells the rights to a system of doing business to individuals (franchisees). Each franchisee pays a franchise fee in order to buy into the system, then pays ongoing royalties for the right to continue using the franchise’s name and trademark.
What do you need to apply for a franchise?
This initial application will differ from company to company, but it will typically include questions about your work history, plans for your franchise and your personal finances. It may ask you to provide proof of finances, such as bank statementsand deeds. Answer these questions thoroughly.
How many steps are there to buy a franchise?
If you're wondering how to buy a franchise, this article will explain the process. We break it down into seven steps, from analyzing your viability to...
What is a franchise business?
A franchise means buying into a proven business model, one with a market-tested product, branding and an established customer base. When it works, this can be a great way to become your own boss and stay that way. So how to buy a franchise? Here are seven steps that can take you from eating Big Macs to selling them.
Does liquidity matter in franchises?
Liquidity, in particular, will matter because buying a franchise costs thousands of dollars.
Do all companies offer local opportunities?
Not every company will offer local opportunities. Look up the options where you want to build your business and then settle in for the real research. Your goal here is to narrow down the options to just one or two possibilities. Picking the rightone or two can make all the difference between success and failure.
How do you buy a franchise?
While it may seem simple at first, there are some things you may want to consider to ensure this purchase could be a home run for you.
Review the Franchise Disclosure Document (FDD)
If you feel you need an attorney to review the Franchise Disclosure Document (FDD) then you will want to make sure you are using a franchise attorney that is specially trained to work within this industry and understands what can, and can’t, be changed a franchise agreement.
What is the net worth of a franchise?
Simply put, your net worth is the sum total of all of your assets, minus any liabilities. Your assets could include cash, income, property, stocks, and more—while liabilities could include things like a mortgage, credit card debt, etc.
What can a franchisor do for you?
Support. Your franchisor can give you advice, insider tips, and support for the life of your business.
Is the financial side of franchises stressful?
The financial side can be stressful and complex, and there’s more you should know beyond your various financing options . We’ve put together some tips to help you navigate this part of the process and give you tools to ensure you know your rights as a franchise owner.
Do you have to pay franchise fees?
Franchise Fees. You will be contractually required to pay some percentage of the monthly gross earnings back to your parent company throughout the life of your franchise. This, of course, takes money out of your pocket. Learn more about franchise fees below!
Is it good to own a franchise?
Owning a franchise is a wonderful way to start your journey as an entrepreneur. So many highly successful individuals have made their fortunes through franchising. Opening and operating a franchise, however, is a serious endeavor. It can be overwhelming, but we are here to help you navigate that process.
What are the parts of owning a franchise?
There are a few different parts of owning a franchise, including doing your research, getting hands-on, understanding your finances and launching your business. Understanding each is key to picking the right franchise and getting off on a positive foot for future success.
What is a franchise agreement?
Your formal contract is called the franchise agreement, and it’s a document you should review very, very carefully. This is a binding document that lists your fees, obligations and more. If you have any questions, now is the time to ask them.
What is a franchise discovery day?
If possible, attend a Discovery Day. A large portion of franchises, both big and small, offer what’s called a “Discovery Day” in which prospective franchisees spend time at the corporate headquarters or in an existing franchise location.
Is it possible to start a business from scratch?
Beginning a business from scratch can be a huge undertaking that not everyone is game for — you have to think of everything from beginning to end. With a franchise, customers already know your brand name, operating procedures are established and the greater marketing plan generally comes directly from corporate.
Is it bad to own a franchise?
Potential drawbacks to owning a franchise. Of course, owning a franchise isn’t all roses. First and foremost, there’s the upfront cost. Franchises can be expensive, especially in high net-worth and busy markets, which means a big investment for a business that isn’t established yet.
How to decide whether to franchise or buy a business?
Quantify your investment: Review your financial landscape and decide how much you’re willing to spend to purchase — and ultimately manage — the business.
What is the difference between franchising and buying a business?
The main difference between franchising and buying an existing business is the level of control you’ll have over your business.
What is business format franchising?
Business format franchising : The franchisor and franchisee have an ongoing relationship. This style of franchising normally focuses on full-spectrum business management.
What is the most common form of franchising?
Two common forms of franchising are: Product/trade name franchising : The franchisor owns the right to the name or trademark of a business, and sells the right to use that name and trademark to a franchisee. This style of franchising normally focuses on supply chain management.
What does a franchisor do?
Typically, the franchisor offers services like site selection, training, product supply, marketing plans, and even help getting funding. When you buy a franchise, you get the right to use the name, logo, and products of a larger brand. You’ll also get to benefit from brand recognition, promotions, and marketing.
What are the zoning requirements for a business?
Zoning requirements : Zoning requirements may affect your business. Make sure your business follows all the basic zoning laws in your area. Environmental concerns : If you're buying real property along with the business, it's important to check the environmental regulations in the area.
What is a franchise business?
A franchise is a business model where one business owner (the “franchisor”) sells the rights to their business logo, name, and model to an independent entrepreneur (the “franchisee”). Restaurants, hotels, and service-oriented businesses are commonly franchised. Two common forms of franchising are:
Buying a franchise starts with brand identification, investment awareness, interview procedures and then an official signing
Buying a franchise starts with brand identification, investment awareness, interview procedures and then an official signing.
By Justin Wick
The first and arguably most important step toward buying a franchise is identifying which brand you want to invest in. This is often discovered organically, whether it be through advertisement or personal association.
How Do You Buy A Franchise?
- While it may seem simple at first, there are some things you may want to consider to ensure this purchase could be a home run for you. 1. Use experts to help you with your search, funding and purchase 2. Take your time, the right choice is better than a fast pick! 3. Follow the process, make a good impression. This is a mutual investigation. 4. Exp...
Let’s Look at Those in A Little More Detail
- While most people hesitate to get expert advice in their job we have found that experts can be very valuable in the franchise search and purchase process. The least known expert available to franchise buyers are Franchise Consultants, you just met one… ME! I and folks like me work with people searching for their perfect franchise. You could expect to go through some sort of inform…
Review The Franchise Disclosure Document
- If you feel you need an attorney to review the Franchise Disclosure Document (FDD) then you will want to make sure you are using a franchise attorney that is specially trained to work within this industry and understands what can, and can’t, be changed a franchise agreement. Using a specialist could save you a considerable amount of money as compared to using your family or …