Franchisees get the best of both worlds – the independence of small business ownership and the support of an established business model. But contrary to what most people think, starting a franchise isn’t as easy as it seems. And in most cases, you might need the help of franchise business loans to get by. To help you get started, here are seven steps in putting up a successful franchise.
1. Do Your Research on Franchising
Opening a franchise is a huge decision; it costs time, effort, and money. Before investing in a franchise, it’s important to learn more about it – how it works, what to expect, and more. If you haven’t decided on a type of franchise, do your research and choose one that best fits your needs and preferences. Be sure to consider the cost of the franchise, your personal preferences, and the policies and guidelines of the franchise.
2. Evaluate the Costs and Fees
There are initial costs associated with owning a franchise. Some of the common purchases you’ll need to make are:
- Supplies and Equipment: Franchisers will inform you of the type of equipment necessary for your business. They’ll also tell you where and how you can obtain it. Depending on the franchiser you’re working with, some may even offer to fund your equipment acquisition.
- Space: You may need to purchase real estate or pay rent to run your business. A franchiser often gives location recommendations, and some even have specific requirements. Make sure to ask about it as you move along through the process.
- Franchise Fee: A franchise fee is the sum of money you pay upfront to secure the rights of operating the franchise. Assess your finances and make sure you can cover the initial costs of the franchise before pursuing it. Franchise fees usually range from $20,000 to $100,000, depending on the type of franchise. It’s no doubt franchise fees can be steep. Fortunately, you don’t have to fund it out of pocket for the simple reason, there are small business loans you can apply for to help fund the costs of starting a franchise.
3. Ensure You Have Enough Funding
Franchisers typically ask for the franchise fee payment upon signing the contract. For this reason, it’s crucial to ensure that you have enough funds to cover the franchise fee, as well as other expenses associated with running a business. The good news is, you can apply for a franchise business loan that can help you finance your business venture.
4. Double Check the Franchise Contract
The franchise agreement is the contract that gives you the rights to open a franchise. This document contains a long list of rules and regulations. It’s better to consult a lawyer that’s well versed with franchising to help you understand the contract.
Take note of the promises franchisers make during your meeting, and make a point of checking if it’s clearly stated in the contract. Make sure that everything is outlined in the agreement – from the suppliers, ownership, royalty fees, location, pricing, etc. Go over the agreement with your franchiser and lawyer and ask questions before signing anything.
5. Choose the Location of Your Franchise
Once you’ve signed the contract, the next step is to choose the location of your franchise. As previously mentioned, you can purchase or lease an existing space. Your franchiser will often recommend the best spots to set up shop. Expect to work closely with your franchiser in order to ensure that location and the size you choose is suitable for the needs of your franchise. You might also want to consider the traffic, including foot traffic because ideally, you want to put up your franchise in a busy area.
6. Attend the Franchisee Training
Franchisers provide franchise training programs to teach you everything you need to know about running the business – from products and services to marketing, employee management, bookkeeping, and more. The training may happen before you sign a lease or while you’re looking for places to put up your business. It often lasts a week or two and most have a combination of classroom instruction and on-site training.
7. It’s Time to Launch Your Franchise!
Once a franchiser approves your location and you’ve set up shop, it’s time to set the launching date. Most franchisers provide you with marketing materials such as signage, premade advertisements, and promotional ideas for the grand launch of your franchise. Some franchisers even send a corporate consultant to help you prepare for your opening day.
Discover More about Franchise Business Loans Today
Let’s face it: opening a franchise requires a lot of money. If you’re struggling to make ends meet for things such as paying franchise fees as well as daily business expenses, consider applying for franchise business loans. SMB Compass offers different loan programs for franchisees.
To get the scoop on all of the details, simply call us today at (888) 853-8922 or email us at firstname.lastname@example.org to schedule a free, no-obligation consultation.