Franchise research, protected territories, info requests, and franchise agreements … oh my!
If the amount of work involved in franchise ownership seems overwhelming, you’re not alone. Just like any form of business ownership, transitioning to franchise ownership involves research and a lot of time and effort. Given the sheer amount of franchise opportunities out there, purchasing a franchise can seem like a monumental task. To stay on the right track, use these six steps as a general guide to your franchising experience.
1. Research, research, research
There are franchises in nearly any industry you can imagine, which means there are thousands of businesses to choose from. The best place to start your journey to franchise ownership is the Internet. Research the various franchise industries including food, automobile, fitness, tutoring, and vacation, among many others. Consider whether you have a passion or particular interest in a specific industry.
Once you narrow down your search to a specific industry, research some of the most popular franchises within that industry. Consider the product or service they provide and the amount of locations the franchise system currently owns.
2. Submit an Info Request
One of the best ways to get further, more detailed information on the franchises of your interest is to request information or submit a qualification sheet. These forms are often conveniently found on all franchise listing pages or on the franchisor’s homepage. After entering a few pieces of information, info requests are sent directly to your email box and can be used for more extensive research on your franchises of interest.
Most franchisors want an idea of your current state in order to gauge your interest. Most franchises have certain qualifications that a potential franchisee must fulfill in order to qualify for franchise ownership. If the franchisee meets this criteria, they may continue with the franchising process.
After entering a few pieces of information, info requests are sent directly to your email box and can be used for more extensive research on your franchises of interest.
3. Make the call and take the trip
Once you have learned more about your franchises of interest, make the call to or visit existing franchisees of the business. Consider questions you’d like to learn more about. Ask them to elaborate on their experience with the company. Consider how long they have been a franchisee and how happy they are with their experience. Once the general inquiries are out of the way, ask more detailed questions about the viability of the industry.
Also take a trip to the franchise and get a feel for the location. As most franchises tend to look similar to one another, think about whether you can picture yourself working for the company.
4. Meet the Franchisor and Review FDDs
If you meet the franchisor’s criteria and are pleased with the information you’ve received from outside sources, meet the franchisor face to face. This is an opportunity for you to ask further questions and experience the general dynamic you feel with them. After all, as a franchisee, you will answer to the franchisor. This is also a good moment to voice any concerns you may have.
Meeting with the franchisor and reviewing franchise disclosure documents is one of the biggest steps in the process. The Franchise Disclosure Document–a large contract-style packet that outlines the nitty gritty details and expenses to owning the franchise–is the primary opportunity to get a true idea of the costs you can expect. The FDD consists of 23 different pieces, all of which closely outline the many aspects behind franchise ownership.
5. Sign the Franchise Agreement
If you feel satisfied with all of the information you have received from the FDD, it’s time to sign the Franchise Agreement. Prior to signing the Franchise Agreement, it may be beneficial to consult a franchise attorney. These lawyers specialize in franchising and can help you better understand the Franchise Disclosure Document and franchise contract. All parties involved in the contract (both yourself and the franchisor) want full transparency in the franchise transaction. Therefore, it is to your benefit to ensure you have full understanding of the elements at hand.
6. Choose a Potential Site, Attend Training, & Open your Franchise
Most franchisors reserve the right to approve or veto your desired franchise location. While you’re choosing a potential site, consider the population of the area. Is the majority of the area populated with a demographic that will likely become future clientele or customers?
Once you have selected a site and signed the Franchise Agreement, the franchisor will likely require that you attend a training program at the franchise system’s home base. These programs often last a few weeks and give you an in-depth introduction to franchise ownership, including the challenges you may initially face.
Once you have completed the training program, built your franchise location, and obtained all the necessary materials and products required by the franchisor, it’s time to open your franchise! Often, franchisors provide franchisees with specific steps and protocols for opening day. While this day is important, it is also an achievement! The steps to franchise ownership are complete!