Since 2013, the number of franchise establishments in the United States has been on a gradual increase. This means more entrepreneurs are embracing the franchise model instead of starting new businesses from scratch, and it’s easy to see why.
When you buy a franchise, you are buying into a proven business model. At a time when many small businesses are failing because of lack of product demand, franchising gives you a greater shot at success.
That said, starting a franchise still needs intricate planning and a sound management strategy. Continue reading for awesome tips to get the ball rolling.
Settle on the Right Industry
Just because a franchisor has a proven business model doesn’t necessarily mean your establishment will succeed. Even if a franchisor is profitable, if you open a franchise in a location with high competition, you might struggle to attract customers.
As such, the first step is to research the market and identify the products or services that have strong demand but are in short supply. Don’t start a fast-food franchise just because franchising is very popular in the restaurant and foodservice industry.
Look into untapped markets. For instance, if your location is bug-infested and there are only a few service providers, there could be a good bug control business opportunity right there. Now you can shift your focus on finding well-establishing pest control companies that also offer franchising opportunities.
Get a Franchise Disclosure Statement
After picking out a potential franchisor, reach out and ask for the franchise disclosure statement. This is a document that details the company’s franchising rule, costs, franchisee obligations, and whatnot.
This should give you a good idea of whether the company’s values and goals align with what you want of your business. Remember, starting a successful franchise is more than chasing profits. You need to have a purpose that resonates with your target market.
If the franchising terms work for you, the next step is to organize a meeting with the franchisor. This is the time to get a more in-depth explanation of their franchising processes. It’s also an opportunity for them to assess your goals and determine whether they want to work with you.
Bear in mind some franchisors require franchisees to meet certain qualifications, such as having a college degree in specific fields or an occupational license.
Secure Franchise Funding
Starting a franchise can be a capital-intensive project.
Besides a one-time franchising fee, which can be as low as $10,000 to as high as $50,000 or more, you have to budget for a commercial space, labor, branding and marketing, and equipment purchases.
So you have to know your capital requirements and raise the money. Depending on how much you’ll need, your funding options include business loans, crowdfunding, borrowing from friends and family, and taking on equity investors.
Set Up Your Space and Open for Business
With capital secured, the real action begins.
Find an ideal spot in your location and rent or buy a commercial space. The franchisor might send over professionals to help you with the branding and layout of the space.
Set up the equipment, hire your first employees, and stock up the products you’ll be offering. Now you’re ready to open for business!
Starting a Franchise Made Easy!
Starting a franchise is an ideal way to venture into entrepreneurship. Although you won’t have to develop a business model, you still have to do much of the groundwork. With this guide, you’re no doubt in a strong position to start a franchise that’ll rake in the profits.
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