Follow these Five Essential Steps to Start a Franchise Business
Franchising comes with a lot of fundamental advantages for an entrepreneur. The benefits of owning a franchise include authenticated track record, operational support and the commercial value of the brand name, among others.
Despite all these benefits, one should conduct a thorough research before rushing into buying a franchise. The understanding of how to start with the business is quite an important aspect of ensuring the steady growth of your upcoming business. Therefore, for all the budding franchisees, here are five essential steps to start a franchise business.
A Thorough Research is Essential
The first and foremost step is to understand everything about the world that you are about to enter. Franchising is a vast ocean of opportunities and it’s important for you to know which opportunity is suitable for you. Acquire some deeper knowledge of franchising in general, how it works, what to expect and how to select from all the options available to you.
After understanding the basics, it’s time to decide upon a perfect opportunity that you could explore in franchising. It could be decided on the basis of your personal preference, cost of franchise and rules and guidelines of the franchise.
Attend the Franchise Discovery Day
Franchise discovery day is generally a day-long event where franchisor and franchisee meet to get to know each other well. This is the very first chance for a franchisee to know everything about the company’s corporate culture, values and policies; this event helps to know whether the franchise is suitable for you or not.
Attending the event is necessary to decide upon whether you should take up this franchise or not. So, make sure you attend it and make the most out of it.
Review Your Franchise Agreement
After the discovery day, if you’re selected as a franchisee, the franchisor will present you with the franchise agreement. Franchise agreement is the formal contract that gives you legal rights to open a franchise, conditional on a long list of rules and regulations.
Once you receive a franchise agreement, make sure to consult it with an experienced lawyer. Apart from that, make sure you yourself check if all the verbal promises made by the franchisors are outlined in the agreement. In case of discrepancies, make sure to bring them up with franchisor and settle them down.
Get Your Funding
After signing the agreement, you should now worry about the funding of the business. Capital is essential to incorporate all that is required to open a business. For instance, buying or leasing the location, manufacturing units, marketing costs, selling costs etc can only be carried out if you have funds. There are various options available in the market for financing the business: SBA loan, traditional bank loan, micro loans, crowdfunding, and angel investors among others. Many franchisors also provide funds to franchisees to help them getting started.
The Grand Opening Day
After everything has fallen into place, the opening day of the franchise comes. Ideally, 20% of your first year marketing budget should be spent for the opening day. This is because the grand opening could help in the advertising of the franchise store.