Step by step guide to becoming a franchisee
If youíre contemplating becoming a franchisee but arenít sure what the process is for doing so, youíve come to the right place. Our handy, ten step guide will walk you through all of the various preparatory stages youíll need to consider if youíre to become the manager of your very own business.
How to become a franchisee - step by step guide
1. Do your research
No matter what type of franchise youíre thinking of buying, it's essential that you perform extensive research before committing yourself. Whether itís a big franchise or a small franchise, an established, big-name brand or an up-and-coming business, you should never sign up to a franchise without having developed a firm understanding of what the franchisor can offer you as a franchisee. Likewise, you need to know what the franchisor will expect of you. To find a franchise that best fits your skills and abilities, you'll have to be prepared. The only way to ensure you're prepared is by doing your research.
2. Discuss your options with relevant financial institutions
While some fortunate applicants will be able to fund their investment without relying on assistance from financial institutions, the vast majority of potential franchisees will need to approach a bank for funding. Many franchises have developed useful agreements with leading lenders, and it is possible to have anywhere up to 70% of the initial investment covered by a bank. However, youíll still need to approach a lender to find out whether theyíre willing to finance your franchise acquisition and, if so, what terms they can offer you.
3. Request legal advice
Franchising often involves a significant amount of complex contractual law. While it's not always necessary to take legal advice, we strongly recommend that you do so. Legal advisors with a speciality in franchise law typically have a great deal of experience in preparing potential franchisees for their new role. They know what to look for in the franchise agreement, are aware of basic contractual terminology, and can steer you clear of contracts that aren't in your best interest. While legal advice may be expensive, entering into an agreement without having it read over can be even more costly.
4. Meet with the franchisor
As your preparations progress and youíre increasingly sure that youíre making the right decision, you should make time for a visit to meet the franchisor. The franchisor/franchisee relationship will be critical to your success. It's essential that you understand the type of individual, or group of people, that youíll be working with. Make sure youíve prepared a list of questions for the franchisor and donít be afraid to request more information if their answers arenít satisfactory.
5. Visit existing franchisees
Having met the franchisor, itís now time to contact existing franchisees. Typically, any franchisor that doesnít have anything to hide will provide you with a list of contact details for all their existing franchisees. This gives you the opportunity to hear from those working on the front line of franchise operations.
6. Put together a business plan
As you prepare to sign the franchise agreement, itís a good idea to begin putting together a new franchise business plan. This will involve collecting all available data and analysing it in a way that allows you to make projections for expected profit and turnover, as well as a variety of other financial measurements. This business plan may be used to support your loan application, so itís a good idea to get a financial advisor to read it over or help with its creation.
7. Sign the franchise agreement
With everything prepared, it's time to sign the franchise agreement and commit to your future as a franchisee. This is a big step. Once you've committed to the franchise, itís difficult to reverse your decision. Consequently, it's vital that you're sure that youíve made the right choice. Donít be pressured into signing the agreement Ė a good franchisor will give you the time you require and wonít rush you through the process. At this stage, there shouldn't be any significant doubts in your mind. All of your research and findings should point to the fact that this is a viable business with a healthy chance of turning a profit, and you should know that youíre a good fit for the franchise.
8. Finish all applications
Now that youíve signed the franchise agreement, itís time to finish and finalise all other applications. The bank should come back to you with a decision regarding your loan application, while you can also push ahead with signing the lease for a property. Itís important to try and avoid signing a lease on a business premises until your finance has been approved and you've signed the franchise agreement. Otherwise, you might find yourself in trouble should the deal fall through.
9. Receive training and support
To become a franchisee, youíll need to go through an extensive training programme that prepares you for life as a manager of a new business. Most training programmes pass on the necessary skills required by franchisees, though thereís still a great deal youíll have to learn on the job.
10. Open your new business!
Having completed all nine previous steps, itís finally time for the grand opening of your new business. The franchisor will usually help launch fledgeling franchise units by providing guidance, marketing materials, and other types of promotional support. Make sure you make the most of this assistance, as successful franchisors will have been through this launch process numerous times and understand precisely what works and what doesnít work.
Becoming a franchisee involves a great deal of dedication and is typically a long process. However, itís vital that you donít rush and that you take the necessary steps to ensure you're making the right decision. Don't be pressured into signing a franchise agreement until everything is in place and always seek guidance from industry experts if you have any questions. If you follow our ten simple steps, youíll soon be taking your first steps on the road to becoming a successful franchisee.
The Editorial Team, Point Franchise ©
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