The desire to own your own business is exciting and terrifying at the same time. You dream of selling exactly what people want, and it is your life. It’s a calling to serve. Then you look into it, and there is so much to do to build your brand and set up your business. If only there was an easier way to do it.
Fortunately, there is, and it is called franchising. It allows you to run your own business while having the backing and recognition of a parent company to lean on.
How do you get started? Here are the steps on how to become a franchise owner.
1. Understand your interest and skill set
There are many types of franchises across most sectors, so you need to find something that fits you. Take a look at your past work history and analyze how you performed and if you were happy.
Consider what you want to be doing as a business because a job is easy to leave; you can just quit. When you start a business, especially as a franchisee, you have contractual obligations, so you need to pick one that matches your passion and abilities.
2. Make sure you can afford the franchise.
It is essential to do a financial assessment to see if you can afford to look at franchises. Most will require a minimum net worth for an applicant, and if you don’t meet it, you are out of luck.
Measure your assets to your liabilities to determine your net worth. This will determine where you stand and narrow your search to companies that match your financial situation. You also need to determine your risk tolerance because this is a major decision that will affect you and your family for years to come.
3. Search for franchises.
Start your search online and try to narrow it down based on your interests. This is not always the best tactic as there could be a lucrative franchise that may not get you too excited. Remember that you will be putting in long hours and working incredibly hard, so it makes sense to have a passion for what you are doing.
When looking for franchises, consider these factors:
- Franchise Model
- Brand Reputation
- Market Opportunity
- Financial Performance
- Territory Restrictions
- Initial Investment
- Net Worth Requirements
These will help you determine your chance of success in this new endeavour.
4. Seek out a franchise lawyer.
Once you have found a franchise or two that interests you, you can request a franchise application, and if the company is interested, they will send you a franchise disclosure document. This will be a comprehensive look into their business model, and what the franchise deal entails. It can be very overwhelming, so you must have an expert working with you.
A franchise lawyer knows how to do the due diligence to identify any problems with the franchise and help you understand the agreement that you will be signing. They can assess the viability of the business and help you negotiate with the franchisor to protect you and your assets. Their legal advice is crucial for navigating a franchise purchase, and they can even represent you if things go sour.
5. Have a discovery day.
This is an opportunity to meet with the franchisor at their offices or business location and see if it is a good fit. This is one of the last steps before making your dietician buy the franchise and means that you are an ideal candidate.
You will be shown one of the facilities and meet the key staff you may be working with. This is where you can ask questions and learn about their franchisee program. You may also have the opportunity to meet other franchise owners and get input from them.
While you are evaluating them, they will also be evaluating you. There won’t be any hard selling at this meeting. Both parties want to make sure they can work together, and it feels right. Take what you’ve learned back home and digest it. Then consult your lawyer.
6. Secure franchise financing.
You should have already gotten pre-approval for funding your franchise, but now is the time to nail it down. You can get standard bank loans with lines of credit and small business financing, and different government lending programs. Make sure you have cash reserves to keep you afloat, as it may take a while to turn a profit after opening.
7. Pick out your franchise location.
Yes, location is still key. You want to have an ideal spot where people can find and access your business, so consider where you want to have your location.
The franchisor will have certain stipulations as to location, so it is easier to work with a realtor based on those requirements.
Once you are sure this is the franchise to buy into, the hard work begins. This will include the build-out, training, hiring staff, organizing supplies and, of course, making payment.
It is an exciting time to become a franchise owner. You should avoid any potential problems by following these steps, so enjoy the process and follow your dreams of business ownership.
