When it comes to starting your own business, many people think that the only option is to go it alone. However, this isn’t always the case.
There are many franchise opportunities for those who are looking to be their own boss without all of the risk. Franchise owners can cut through much of the stressful startup and development process by finding the right franchise.
They can be a great way to get started because you have ongoing support from a parent company. This gives you a leg up on independent small business owners who will not have that support or the well developed systems of a franchise.
The key is to find one that is a good fit for you and your skill set. And that starts right now!
How Should You Go About Finding a Franchise Opportunity?
When you’re “shopping” for the right franchise, there’s a clear path to follow:
- Decide what type of business you want
- Look for franchise opportunities which meet your criteria (find the right franchise for you!)
- Conduct online research on your desired business model
- Get expert advice from the proper franchise community
Besides the hotel and restaurant industries, successful franchises operate in many other service-related sectors.
The International Franchise Association website has a directory you can browse.
Put together a list and notate which ones peak your interest right away. Review this updated sheet and narrow it down further to your top one or two choices.
Pro-tip: Utilizing a franchise broker to highlight your interests and narrow down your list to the right franchise can save you a ton of time and effort.
The final step involves conversations with current owners in the franchise system or friends who are familiar with the process.
Additional Ways To Determine a Fit
Although they aren’t necessarily obligated to relay this information, you can ask the franchise owner what their ultimate goal is.
Do they eventually want to sell it? Or hold on to it until retirement?
If they aren’t comfortable sharing this information until you’re working together, consult their franchise disclosure document. You may be able to discover more during your reading.
Besides a Franchise Disclosure Document, What Else Should You Consider Before Choosing Which Franchise Opportunities Are Best For You?
The franchise owner sitting in front of you during discovery day will be at one of two stages in their franchise business:
- Just starting out
- Already established
Even if they’re brand new, they should have a working prototype of their franchise system. Should they not, this may be an early red flag and reason to meet with their competitors.
If they already have existing units being operated, they should be able to highlight one for your education. Understand they will likely select their top performer, so it may be worthwhile to also visit a couple other stores.
Do they have well put together franchise disclosure documents? Missing financial figures and sloppiness could be a sign of unrealistic overall net worth. Have a professional review these with you if necessary.
Special Considerations With a Master Franchise Agreement
Normally the head franchisor will be directly involved when you partner with them.
But there’s a few occasions when support is delegated to a master franchisee instead. Imagine them as a “general manager” over a specific region.
If your franchise agreement involves this arrangement, note a couple of facts:
- Certain responsibilities are split between the master franchisee and franchisor
- The master franchisee may change during your operation of the business
Let’s look at an example of divided obligations. Your onboarding training may be led by the franchisor, then handed off to the master franchisee for future mentorship.
This could be beneficial as you’d have greater local access with questions. That is unless the master franchisee is only as experienced as you.
What happens when your mentor reaches their term limits with the franchisor? They may be replaced by a more seasoned owner operator. Or you may see a dip in support from this new person.
What Are the Steps Involved in Buying a Franchise, From Researching to Signing on the Dotted Line?
Even outside of the physical steps you’ll have to take, one important aspect takes precedence over others.
- Know yourself
Write down your strengths and weaknesses as applicable to running your own franchise. List your top goal if you decide to move forward with this business opportunity. Then you can get practical by noting available working capital.
Okay, now you can move on.
Research, research, research. Perform your due diligence ahead of time in cementing your top franchise business choices.
Also, ensure you’re comfortable with the prospective company and understand the franchise agreement. Legal help can assist with that last component.
Passion is required to drive growth and weather economic downturns. Ask yourself if this sector is where you’re motivated to operate.
Especially for first time entrepreneurs, franchises are a wonderful opportunity. This will remain true if you’ve really weighed all options and selected the most ideal fit.
Last Steps Before Signing
Even if you’re on board with the franchise system and owner, hold off on signing for the moment.
Address the following:
- Verify the culture and values align with your own
- Prepare your mindset to take calculated risks
We have another article on additional tips your franchisor may have neglected to mention. You can find it here.
How Do You Manage a Franchise Once It’s Up and Running, and What Support Is Available From Franchise Owners?
Establish a high-caliber leadership team and regular communication with your franchisor or master franchisee. Have grace for yourself and keep your main goals at the forefront of your mind.
Doing so will increase the chance of early and ongoing success. It can’t guarantee it because there are other variables.
But the likelihood of a positive outcome is more realistic.
Use Every Available Resource
Over the course of the working relationship with your franchisor, expect to tap into support systems.
Areas they’ll assist in:
- Training to accelerate early success
- Marketing support
- Mentorship from a successful owner
- Established brand recognition
Tap into the mentorship at your disposal to learn from someone who’s been there before you. Perhaps you’ll be able to avoid the mistakes they made and learned from!
What Are Some Things To Consider Before Buying a Franchise, Such As Financial Stability and Industry Trends?
Ask the franchisor why you should purchase from them instead of the competition. Pay attention to whether they only highlight the advantages. Transparency around any supposed disadvantages sets a good precedent for joining a high-integrity culture.
Negotiation Helps You Start With a Solid Foundation
Decrease future headaches by negotiating limitations on obligations the franchisor can hand off to someone else.
Another option is how you can receive direct support if the master franchisee isn’t fulfilling their promises. Get the franchisor’s commitment to any agreed upon changes in writing.
Are There Any Risks Associated With Owning a Franchise, and How Can These Be Mitigated Beforehand?
Situations outside of your control can arise at inconvenient times. But you should still be conscious that the franchisor can choose to terminate or not renew your contract.
The reasons may vary, but here’s a few possible scenarios:
- Poor planning by the franchisor
- Unforeseen economic conditions
Working diligently to grow your business and making wise financial choices creates a cushion should either condition show up uninvited. Rather than worry about potential risks, keep doing what you do best. Building a profitable venture!
Easing the Risks
You have control over certain risks. Like paying royalty fees and sending accurate financial reports. But what about those outside of your power?
For example, a dispute that arises between you and the franchisor.
Consulting with a legal professional is the best way to become educated on avoiding unnecessary risks. And also handling ones that happen regardless.
Finally What Are Some of the Key Things You’ll Need To Do in Order To Make Your New Franchised Business a Success?
There are countless ways to ensure a profitable outcome. But you don’t have countless hours for reading.
So, here you go:
- Refine interpersonal skills
- Lead by example
- Put your staff first
- Utilize wise counsel
- Don’t innovate too much
- Offer assistance to others
- Follow the rules
Now, you’re ready to take action and become a successful entrepreneur. Just about.
Reidel Law Firm Assisting the Franchise Industry
As experts in franchise law, we can help you handle the legal aspects of any franchisee issues. We help franchisees evaluate a potential franchise opportunity so they have a full understanding and assurance of the franchise system they join.
By effectively managing risk and maximizing opportunities for businesses we answer the needs of our clients wherever and whenever they arise.