How To Buy A Franchise In 6 Simple Steps
Buying a franchise is a good option for entrepreneurs who want to start a business but don’t want to go through the hard work of establishing a new brand and system. However, purchasing a franchise is not as simple as it may seem. This article will show you how to buy a franchise in 6 steps.
1. Research Potential Franchise Opportunities
The first step when buying a franchise is to do your initial research on the different franchise opportunities available. It’s important to find the right franchise according to your budget, qualifications, and personal interest. There are many franchises available in the India and you can typically find them listed on various online sources.
To know which franchise is a good fit for you, it’s important to first research typical franchise requirements to ensure you qualify and have the proper information. Alternatively, you can approach a Franchise Consulting Agency to do this for you. Then, conduct a self analysis and determine your own skills, resources, and interests.
2. Carefully Review the Franchise Agreement
Once you’ve shortlisted the franchise, the franchise agreement is the formal contract that a franchisor will provide, if they see you as a good franchisee candidate. This contract gives you the legal right to own and open a franchise under their rules and regulations. It’s wise to hire a lawyer or a franchise consultant with franchise experience to review and discuss the contract with you so you can fully understand everything.
If the franchisor made verbal promises or deals during your meeting, it’s important that they are written in the contract. For example, if the franchisor promised to provide legal support in the event of a lawsuit, make sure this is written in the contract. Rules on suppliers, pricing, transfer of ownership, protection of territory, royalty fees, hiring staff, training, and other relevant support must also be clearly indicated in the contract.
3. Get the Right Financing for Your Franchise Startup
After you review and sign the franchise agreement, the next step is to obtain financing. You will need funds to cover the costs associated with buying a franchise. The first that you need to pay is the franchising fee, which is typically due after you return the signed agreement. Conventional bank loans are sometimes more difficult to qualify for. However, if you have a really good credit history, have a high net worth, and have existing business dealings with the bank, or if you’re opting for a renowned brand’s franchise, you might qualify.
4. Choose a Location
If your franchise is not home based or mobile, you need to choose a location where you can run your business. Franchisors will likely provide you with guidelines to ensure that you meet their location requirements, which may require a certain distance from other franchises, minimum area, and number of parking spots. You can seek help from a commercial real estate agent to ensure you find the most suitable place that meets these requirements.
5. Take the Necessary Training & Workshops
The next step is to take all the necessary training and workshops to equip you and your staff with the skills and knowledge necessary to run your business. The franchisor will typically provide the training sessions, which will either take place in their headquarters, at a franchise location, or virtually, and usually last for 1 to 2 weeks.
Typical training sessions will cover everything you need to know, including the franchise’s products and services, the systems you’ll be using, and the policies and guidelines you need to put in place. Some franchisors offer training in marketing, negotiating with suppliers, hiring and managing employees, filing permits, bookkeeping, creating reports, and more. These sessions will likely combine classroom lessons, hands-on work, and on-site training with equipment and systems.
6. Prepare for Your Grand Opening
Once you have completed all the necessary training and your location is ready, the next step is to open for business. The franchisor will likely offer assistance in the actual opening of your franchise, which will mostly be centered around promotional and marketing programs to ensure that you build your customer base quickly.
It is a good idea to allocate a chunk of your first year’s marketing budget to promote your grand opening. It’s also recommended to ask your franchisor what successful franchise locations have done for their opening ceremonies. Learning what has worked for franchisees in the past is critical as these things can help you prepare for your opening day.
The bottom line is, buying a franchise does not take the risk out of starting a business. But if you
: know your ROI expectations and budget well,
: find the right franchise for you by yourself or through a consultant,
: review the franchise agreement carefully,
: obtain the right financing and finally,
: choose the right location,
you’ll be on the path to a successful franchise business.