Becoming a franchise owner is a great way to get into entrepreneurship if you’re not quite sold on your own personal product or service. It allows you to experience the ups and downs of owning a business while still having the safety net of a big corporation backing you along the way.
Becoming a franchise owner may be a long process but can be achieved in these 5 steps.
1. Research. Research. Research.
No matter how popular a company is: research them out. It is your job to make sure that the franchise opportunity is a solid one. What is their success rate? What is their reputation? Do current franchise owners like them? Do you get to choose the location? What are the available locations? These questions can typically be answered on their website when you look at their franchising page.
Also, consider yourself. Do you have the time? Do you have the money? Do you have the resources or the help? Franchising is expensive — even though they’re an ideal investment opportunity for banks — and the costs will add up quickly. Cautiously work through all of the numbers and make sure becoming a franchise owner works for you.
2. Inquire and Apply
After you’ve decided upon which franchising opportunity you would like to move forward with, most applications can be found online. Take the time to fill out the application carefully and thoroughly, not missing a question and being honest throughout. Unless your application is immediately rejected, franchisors will do a deep dive into your background and credit history. They may ask for additional documentation (e.g., pay stubs, assessment, proof of income, etc) so be watchful and prepared to provide any supplemental information requested.
If all goes well, you will likely be invited to attend Discovery Day, where you will be learning about the business, the process and interviewed by the company to see if you would be a good fit. This is a great opportunity to interview them: ask questions and get a feel for them if you like them. Are they forthcoming? Are they kind? The relationship between the franchisor and franchisee owner should be mutually beneficial.
3. Form an LLC
Many franchisors require their franchise owners to form a legal business entity to operate the franchise. This is to separate business and personal liability as well as to simplify the tax process. Some potential franchise owners form an LLC before inquiring and applying; however, if the franchisor has certain incorporation requirements, it wouldn’t hurt to wait.
Most franchisors offer their franchise owners in-house financing solutions. This is a huge benefit because these financing packages tend to come with benefits (e.g., free supplies, waived or reduced franchising fees, private coaching, etc) that can move your franchise ahead of the competition. It’s also beneficial because you’ll be partnered with a lender that knows exactly what you’re going through and what the business needs.
5. Work and More Work.
After being approved and sorting out the details of financing, it’s time for the long hours of work. As a new franchise owner, you are responsible for building out your location, managing the crew, hiring and building a team, and putting everything into action as outlined in the guidelines. Be prepared for sleepless nights, call-outs, revolving, maintenance, ever-changing schedules, and everything in between.
If you’ve chosen carefully, be deliberate and diligent throughout all of the steps, the only thing you need now is patience. It will be worth it in the end.
At Triport, we specialize in financing solutions for franchises. Contact our offices today to get the funding you need.