When you are looking for a franchise, it's important to do your research and make sure that the business suits your long-term interests.
- Franchisees should look for a supportive franchisor to purchase from.
- Owning a franchise is a long-term commitment, so pursue a business that will still interest you in the future.
- For each of your prospective companies, you should research the processes involved in franchising, ongoing support, and the terms of the franchising deal to help you make your decision.
- What are my personal goals? ...
- What type of industry do I want to conduct business in? ...
- What are my strengths?
- What role do I want to play in the business? ...
- What kind of commitment do I want to make? ...
- What is my investment budget? ...
- A strong support system for franchisees.
How to make your own franchise in 5 steps?
- 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 to choose the right franchisees?
- Is there a demand for the product or service in the intended site location of your would-be franchise?
- How is the franchise’s competition? It’s more than likely that popular franchises may have existing branches near the site you plan to operate.
- Identify industries that are resistant to recession.
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 choose the right franchise structure?
- What speed of growth is required to meet your goals?
- What is your return at the unit level?
- How much support can you provide to your franchisees?
- Does your business lend itself to passive ownership?
- Are you able to cluster units effectively?
- How fragmented is the competitive market?
- What is the degree of competition for your targeted franchisee?
What is a franchise business?
What most of us picture when we hear the word franchise, the business format franchisee purchases a complete system. Franchisors typically provide everything from physical layout to employee training, equipment and supplies. Examples include restaurants, fitness centers and business services, such as copying and shipping.
How long can a franchisee open a business?
According to the FTC, agreements often restrict a former franchisee’s ability to open a similar business for as long as three years. It makes sense that the franchisor doesn’t want you to set up a similar business across the street—the secret sauce is called that for a reason. Just make sure you understand exactly what business activities you will be precluded from, once your franchise term is up.
What is investment franchise?
As the name implies, investment franchises are designed to maximize returns or produce capital gains. They generally have a high buy-in and can be the least hands-on. Franchisees may install a management team of their own or turn day-to-day operations back to the franchisor. Hotels and large restaurants are examples of investment franchises.
What is a distribution franchise?
In a distribution franchise arrangement, the franchisee buys the right to use a trademark and sell the parent company’s product. Franchisees are not purchasing a business system but are incorporating a product into their own. Examples include gasoline, automobile tires, home appliances and farm equipment. A variation on the distribution franchise model is soft drink bottling, where the franchisee is involved in actual product production.
How much does it cost to buy a drain cleaning company?
The increased visibility of a national drain cleaning company like Mr. Rooter may be well worth the $80,00 — $190,000 initial investment to a stand-alone plumbing business. Likewise, a new lawn care company can gain instant name recognition and benefit from the national marketing of a franchisor like Lawn Doctor, at a cost of $102,000 to $120,000.
How much does a mosquito squad franchise cost?
A Mosquito Squad franchise, for example, will not require a brick-and-mortar location, but the franchisee will need storage for the equipment and inventory included in the estimated $65,000 and $90,000 startup cost.
What are contingencies in franchising?
Is yours protected? Is there potential for the franchisor to shrink your customer base by creating another in your backyard? Contingencies—an increase in your territory’s population, for example, or your failure to meet a sales quota—might open the door for competition from a new player. It’s all fair, if it’s spelled out in the FDD.
Shop around
With thousands of established franchises to select from, where does an entrepreneur start their journey? The answer is simple: tradeshows and expos, said Austin Titus, director of Franchise Development for United Franchise Group.
Know where to turn for help
It’s natural to feel a bit overwhelmed when pondering the purchase of a franchise. Fortunately, “there’s an entire industry of professionals who can work with you, as well as a network of resources available, so you can better understand the process,” said Neal Courtney, CEO of Cookie Cutters Haircuts for Kids, a children’s haircutting franchisor.
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.
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 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.
Consider The Franchise Types
Consider Your Long-Range Plans
- How long do you want to be in business? Do you foresee one location for a few years or a multi-location empire to employ your children and grandchildren? Franchises come with different terms—from just a few years to ten or twenty. A short term could mean renegotiating the rights to your territory just when you’re getting the hang of things. Conversely, for business owners on the…
Consider The Available Choices
- Clearly there is a lot of variation in the world of franchising. When you are ready to drill down to the opportunities in your chosen area, you can check the Small Business Administration’s list of approved franchises, or take advantage of The International Franchise Association’s (IFA) interactive tool. [Read: 3 Expert Strategies for Choosing the Right Franchise] Franchising offers …