How does a Franchise Business Work? - PowerPoint PPT Presentation

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How does a Franchise Business Work?


Many big brands in the wellness industry are selling their franchises to people who are passionate to take forward a brand’s name. Franchising has emerged to be a business that has attracted a lot of people. It has opened a lot of opportunities in the wellness industry and benefiting the people. The concept of franchising has evolved a lot since its inception and all have been just for the better. With more clarity and good relationship building between the brand and public, franchising not only benefits in terms of money but also in terms of expanding and reaching out to people at a more fast pace. – PowerPoint PPT presentation

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Title: How does a Franchise Business Work?

How to Open a Franchise in 7 Easy Steps
  • What are the processes and requirements for
    starting a franchise business?
  • Some entrepreneurs prefer to open a franchise
    rather than their own business because it seems
    easier. The benefits of a franchise include
    operational/marketing support, brand equity, and
    a proven track record. However, even franchisees
    need time for research and the proper due
    diligence. To help, well walk you through the
    process of opening a franchise.
  • Here are the 7 steps to take when opening a
  • 1. Do Your Initial Research
  • The first step when you want to open a franchise
    is to learn more about franchising in general,
    including how it works, what to expect, and how
    to select from all options available to you.
    Websites like FranchiseGator can help you find
    franchise opportunities that match your specific
    needs. For more information, you can also read
    our ultimate guide on the top websites to find
    franchises for sale.
  • Once youve identified a few franchises to open,
    do your research and choose to open a franchise
    that fits your needs. The following are important
    factors that you need to consider when choosing a
  • Personal preference What type of franchise
    business you would like to own (e.g. food
    business, technology-related products, other
    kinds of services)?
  • Cost of the franchise What is the total cost of
    the franchise (including the franchise fee,
    property lease, training expenses, equipment,
    insurance, and more)?
  • Internal policies and other rules/guidelines
    What are the franchises internal policies and
    regulations? Do they work with your personal
    management style?

  • Online Research
  • Once you have chosen the franchise you want to
    open, you have to know every detail about their
    franchising terms and conditions. Initial
    research usually begins online you can visit
    the franchises website and find out more
    information about them. You may also want to view
    other sources aside from their website, such as
    reviews and testimonials from their previous and
    existing franchisees.
  • Franchise Disclosure Statement
  • As soon as you let the franchisors know you are
    interested, they will provide a Franchise
    Disclosure Document, also known as a Uniform
    Franchise Offering Circular (UFOC). It outlines
    the franchising rules, fees, your
    responsibilities, and other important information
    including their financial and legal history. Its
    important to read these rules and regulations and
    ensure that you can fulfill your obligations to
    the franchise.
  • 2. Attend Discovery Day
  • Once you choose a franchise, the franchisor will
    invite you to Discovery Day, a day-long event
    where you can meet personally. This is your
    chance to know more about the franchises
    corporate culture, values, policies, and the
    people you will be dealing with. Likewise, the
    franchisor will also have the opportunity to get
    to know you better and size you up as a potential
    business partner, so you have to be prepared for
    discovery day.
  • This is usually the day when the franchisor
    decides whether they want to work with you or
    not. What exactly a franchisor looks for varies
    from business to business. Besides specific
    qualifications (like a college degree, business
    experience, trade certifications, and enough
    capital to invest), a franchisor will want to
    know that youre committed, enthusiastic about
    their products and services, and willing to
    follow their policies.
  • A typical agenda for a discovery day involves
    group presentations, one-on-one meetings, and
    visits to existing franchises. Make sure to make
    the most out of discovery day and get your
    remaining questions answered. After discovery
    day, franchisors will usually expect you to make
    a decision fairly quickly.

  • 3. Review Your Franchise Agreement
  • Considering all goes well with discovery day, the
    franchisor will then present you with the
    franchise agreement. This is the formal contract
    that gives you the legal rights to open a
    franchise, conditional on a long list of rules
    and regulations. Its usually wise to consult a
    lawyer with franchise experience to help with
    your franchise agreement.
  • Note the promises made by the franchisor during
    your meetings and see if they are outlined in the
    contract. For instance, if the franchisor
    promised to provide legal support in the event of
    a lawsuit, ensure that this is clearly outlined
    in the contract. The same goes for rules on
    suppliers, pricing, transfer of ownership,
    protection of territory, royalty fees, hiring of
    staff, training, and so on.
  • Talk to the franchisor and thoroughly discuss the
    contract and your expectations with them. If
    there are any discrepancies between the verbal
    promises and written contract, bring them up with
    the franchisor. They will most likely tell you
    that the verbal promise was made in error and
    those included in the contract are the actual
    terms. Negotiate the terms when necessary.
  • 4. Get the Right Franchise Funding
  • Before you sign the contract, you need to make
    sure that you have enough funds to cover the
    franchise cost and other expenses involved.
    Franchisors normally expect your franchise fee
    payment to be sent with the signed contract. You
    may want to consider applying for startup
    business loans to help finance your startup
  • Here are few of your financing options to start
    your franchise
  • ROBS (Rollover for Business Start-ups')
  • A Rollover for Business Startups (ROBS) lets you
    use funds from your retirement account to invest
    into your franchise without paying early
    withdrawal penalties or taxes. ROBS are usually
    faster to obtain than almost any other startup
    loan. Also, it is relatively simple to set up a
    ROBS and because it isnt a loan, you dont have
    to pay back debt or interest. For more
    information, you can read our ROBS ultimate
  • A Rollover for Business Startups (ROBS) lets you
    use a minimum of 50k in your retirement account
    to buy a new franchise business. Sign up for our
    free informational ROBS webinar and get a
    complimentary 30-minute franchise financing

  • SBA Loan
  • An SBA loan is one of the best ways to cover your
    startup franchise costs. Because these loans are
    guaranteed by the government, they have low
    interest rates, typically between 5 to 9.
    Unfortunately, new businesses may find it
    difficult to get approved for funding. However,
    if the SBA has previously approved loans to the
    franchise youre opening, the review process may
    be streamlined.
  • Traditional Bank Loan
  • Another option is to get a traditional bank
    business loan. However, it may not always be a
    reliable option since many banks turn down
    startups. To increase your odds, make sure to
    come in with a strong business plan that is
    focused on franchises. Also, be prepared to
    present your business plan clearly.
  • Franchisor Financing
  • Some franchisors can directly loan you the money
    you need to open a franchise with them.
    Sometimes, they partner with a financial
    institution or lender to provide loans. The
    benefit of getting a loan from their partner
    lender is that the lender is already familiar
    with the brands business model, and you might
    also get help filling out the application and
    fast financing.
  • Other Funding Options
  • Typically, obtaining financing to buy or open a
    franchise will require a credit score of 680 or
    higher (you can check your credit score for free
    here). If for some reason you cannot obtain
    funding from the sources mentioned earlier, there
    are other franchise financing options which you
    might want to consider. These include microloans,
    crowdfunding, and angel investors to name a few.
    Another good options for funding amounts of 20K
    or less, are small business credit cards.

  • 5. Choose a Franchise Location
  • With your funding in place, you can now sign your
    franchise agreement and start planning to operate
    your franchise business. At this point, the next
    step is to choose a location. The franchisor will
    usually provide some guidelines and
    recommendation to help you find an ideal location
    based on their business analysis.
  • Franchisors may have some strict requirements
    when it comes to a commercial real estate site,
    which includes the minimum square footage and a
    certain number of parking slots required.
    Further, most franchisors have some territory
  • For instance, the location of a restaurant or
    storefront may have to be within a certain
    distance of other franchises. Typically, the
    larger the franchise the smaller the protected
    territory. You might also want to choose a
    location based on traffic, which can increase
    your sales. Read our guide on how to determine
    foot traffic and use data to choose the right
    franchise location.
  • Buying vs. Leasing Your Location
  • Most franchise owners are torn between buying or
    leasing a property when they open a franchise.
    For a start, franchise owners will lease a
    property because theres lower risk and it
    requires less money upfront. However, if youre
    planning to stay in the same location for 7 years
    or more, consider buying commercial real estate
    instead. For more information and a real-life
    example, read our article on buying vs leasing
    commercial real estate.
  • There are commercial real estate loans which can
    help you fund your property purchase. These
    include SBA 7(a), SBA 504, Conventional Bank
    Loans, Online Marketplace Loans, and Hard Money
    Loans to name a few. Average rates range from
    3.5 to 18 depending on the type of loan and
    your qualifications as a borrower. To better
    understand these rates, you can read our article
    on commercial real estate loan rates.

  • For those looking to lease property, its
    important to do the following
  • For Retail Spaces
  • Pay close attention to the 5 location criteria
    (is the area safe, accessible, near your target
    customers, near competitors, and near compatible
  • Try to estimate the square footage you need as
    accurately as possible
  • Negotiate your rent without extending the lease
    for your retail space longer than youre
  • For Office Spaces
  • Only pay for the quality you need. B-class and
    C-class buildings are less glamorous but can
    function all the same
  • Pay attention to the location of employees,
    clients, and other specific business needs
  • Negotiate your rent without extending the lease
    for your office space longer than youre
  • 6. Take the Provided Franchisee Training
  • The next important thing that you must do is to
    take the necessary franchise training programs
    provided by the franchisor. Depending on the
    franchisor, this may occur before you sign a
    lease, or while youre in the process of finding
  • A good training program will not only teach you
    everything you need to know about products or
    services it should also train you in marketing,
    negotiating with suppliers, hiring and managing
    employees, and operations including the filing of
    permits, bookkeeping, creating reports, and more.
    It usually lasts 1 to 2 weeks, with a combination
    of classroom and on-site training with equipment.

  • 7. Prepare for Opening Day
  • With everything in place, the final step is to
    open a franchise is get your franchise prepared
    for business. Other remaining tasks may include
    remodeling of interior, leasing or purchasing
    equipment, filling inventory, advertising your
    open jobs, hiring staff, and getting your
    employees trained. Read our guide on how to find
    employees online for more information on how to
    hire the right staff.
  • Hiring good employees is one of the most
    challenging parts of starting a business. The
    good news is, there are many different ways to
    find quality employees, both online and offline.
    Also, various online hiring platforms have been
    made available for those who need to hire both
    low-skilled and professional workers.
  • How to Plan a Grand Opening
  • Ideally, you should spend up to 20 of your first
    year marketing budget for the opening ceremony.
    This is because the novelty of the grand opening
    makes this advertising budget go much further
    than it does later in the year. Ask your
    franchisor what other successful franchisees have
    done for their opening ceremonies. Additionally,
    you can read more about how to plan your grand
    opening with our ultimate guide on grand opening

  • Bottom Line How to Open a Franchise
  • A franchise doesnt totally take the risk out of
    starting a business. While it provides a proven
    model to followfrom products/services, branding,
    and daily operationsit can leave you pretty
    limited. When you choose to open a franchise,
    its important to thoroughly read and understand
    the disclosure document and franchise agreement,
    and seek legal advice from a franchise lawyer.
  • Contact Us
  • Mobile 91 8097027355, 91 9137256150, 91
  • Email,info_at_ebranding,
  • Address Unit No.450, Mastermind One - IT Park,
    Royal Palms, Aarey Colony, Goregaon (E), Mumbai
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