Before you begin your journey into business ownership, it’s important to have a clear understanding of what to anticipate at each stage of the process. This guide has been designed to assist you in navigating these steps and to provide valuable insights for first-time franchisees. If you want to learn more about the franchise model before diving in, please explore the information available here.
Begin with Targeted Research
If you’re here, you’re on the right track. Franchise directory websites, such as Zorpedia, are excellent starting points for exploring franchising. We serve as a comprehensive online resource, providing all the impartial information you need to prepare for your journey into franchise ownership, along with curated lists of some of the leading franchises in the country.
So, what should you consider?
After identifying a franchise or two that align with your skills, experience, budget, and location, it’s time to dig deeper. Since investing in a franchise is a significant commitment, thorough research is essential. You should assess each franchise from two perspectives: its viability as a business model in the current market and its suitability for your personal goals and preferences. When evaluating a franchise, keep the following factors in mind:
Industry
• What is the Outlook for Your Industry?
• What Changes Could Occur?
• Who are the leading competitors in your field, and how do they stack up against each other?
Brand History
• How long has the brand existed?
• What has the brand’s track record been like?
• Were there any significant failures or successes?
Current Status
• What is the brand’s current position in the market?
• How is its reputation perceived?
• What percentage of existing franchisees are successful?
Leadership
• Who is in charge?
• Is anyone planning to leave soon?
• Are there any new additions to the team?
• What expertise and vision do they bring to the brand?
Goals
• What are the company’s goals for the next 5 and 10 years?
• Is the brand’s system capable of supporting its growth objectives?
Products & Services
• Are there any upcoming products or services scheduled for launch?
• What are the production costs?
Research & Development
• How much research is conducted to identify a viable territory?
• Does the brand carry out consumer research, and what insights have they gained?
Operations
• How frequently, if at all, do field staff visit each franchise location?
• How many employees are required on a daily basis, and what roles do they fulfill?
Marketing
• How much marketing material does the franchisor supply?
• What portion of sales is allocated for marketing and market research?
• Does the franchisor effectively promote grand openings?
Franchising
• How long has the brand been operating as a franchise?
• Do any of your franchisees operate multiple franchise brands?
• How soon can franchisees launch a second location?
Support
• How do you safeguard franchisees from underperforming franchises?
• Is there a Franchise Advisory Council or a similar organization that advocates for franchisees?
• What kind of assistance does the franchisor provide in terms of real estate, development, and construction?
Training
• What types of training programs are provided to franchisees?
• How long does the training take to finish, and what are the expenses involved?
Process
• How much time is required to launch a franchise once the initial application has been submitted?
• What documents are required from the franchisor, and what should the franchise candidate provide?
Costs
• What is the overall estimated investment needed to acquire and start a franchise?
• Are any of the expenses or fees eligible for financing?
• What ongoing royalties or fees exist, and how are they determined?
Don’t simply rely on what we say.
You may discover many of the answers you seek right here on America’s Best Franchises, but it’s normal to have some remaining questions. After you’ve explored all the information available about your selected franchise here, consider checking these additional resources for further (and more in-depth) insights.
Franchise Website
Ideally, the franchise you’re considering has a website where you can access all their franchise information. This is typically where you can learn more about the franchise opportunity and find contact details for the franchise development team. Even if you’re not quite ready to commit, it’s beneficial to reach out and express your interest. They may send you an informational packet or brochure and could arrange a call to discuss their opportunity further. This way, they can address any questions you may have.
Trusted Business Publications
Rely on well-respected newspapers and magazines that you trust to handle some of the research on your behalf. Look for recent articles about the company or industry in publications like The Wall Street Journal, Inc., Fortune, Business Insider, and Entrepreneur. Additionally, consider checking industry-specific magazines such as QSR Magazine, HVACR Magazine, or Green Industry Pros for an insider’s perspective on your area of interest. Lastly, explore franchise-focused resources like Multi-Unit Franchisee Magazine, Franchise Times, or the International Franchise Association website for the latest news and information pertaining to your selected franchise or industry.
Trade Shows and Conferences
Conferences provide an excellent opportunity to network and socialize with fellow entrepreneurs. Industry trade shows can offer a chance to connect with vendors and business owners in your sector while gathering insights on market trends. Franchise industry events such as the International Franchise Expo, IBA/IFA Joint Conference, Multi-Unit Franchising Conference, IFA Annual Convention, The Entrepreneur’s Source Conference, and the Great American Expo Shows are fantastic venues for engaging with franchise owners and operators across various industries and discovering additional opportunities.
Current Franchisees
The individuals who can provide you with the most valuable insights are those who have already experienced the process themselves. Set up a meeting with a current franchisee and ask them about their experience with the opportunity. Don’t hesitate to pose challenging questions, such as: Are you satisfied with your choice to franchise with this company? Would you make the same decision again? This will help you gauge whether you can envision yourself in their position. You can obtain contact details for current (and occasionally former) franchisees from the franchisor, and this information is typically found in the FDD.
Explore every possibility.
Be sure to research the primary competitors of your selected franchisor — their business model may reveal weaknesses or advantages that you might not have noticed in the franchise you’re considering. Additionally, as with any research, make sure to verify all the information you come across and confirm it as much as possible.
Examine the FDD closely.
Once you’ve had several discussions with the franchisor and both parties agree that it appears to be a mutually beneficial partnership, you’ll need to complete an official franchise application or request for communication (RFC). In return, they will provide you with their Franchise Disclosure Document (FDD), which contains a wealth of information about every aspect of the opportunity—potentially making it a bit overwhelming.
It’s wise to review this document with a knowledgeable franchise attorney and a franchise accountant to ensure you fully understand the details. Pay special attention to Item 19, which is the section in every FDD that outlines the financial performance of the company’s owned locations and sometimes a select group of franchisee-owned units.
Meet the team.
If you find the information in the FDD appealing, the franchisor will likely want to set up a meeting between you and their corporate team. Although often referred to as a “Discovery Day,” these meetings typically span more than one day and serve as an intensive introduction to the franchisee experience within that organization. In some cases, the franchisor may even cover part or all of your travel and accommodation costs.
Remember: It’s quite common for prospective business owners to participate in several Discovery Days with different franchises while determining which opportunity suits them best. Take your time to explore your options thoroughly so you can feel confident when making your final choice.
It’s time to make your decision.
Conduct any last-minute research necessary to finalize your decision, and then take the plunge. This choice may not come easily—take some time for self-reflection to ensure you’re satisfied with your selection. When you reach this stage, you deserve a round of applause and a celebratory high-five, but hold off on the champagne for now. At this juncture, it’s essential to develop a written business plan to obtain funding, which can be a complex and time-consuming process depending on the financial path you decide to pursue. Once your funding is secured, you’ll be ready to sign your franchise agreement.
After you sign, everything will start to align.
Signing the agreement marks the beginning of the true preparation needed for business ownership. If the franchise involves physical locations, you’ll collaborate with real estate and construction teams to find the ideal site for your franchise and initiate the buildout process. This is also when you’ll participate in training.
The duration of the training varies by franchisor, but you can typically anticipate a minimum of two weeks of classroom instruction combined with practical training to ensure you’re fully prepared to run your franchise by the grand opening. As the owner, you’ll also be responsible for hiring your staff. Generally, the franchisor will help train your team before the opening day, and in some instances, they may even provide this training at no extra cost.
Grand Opening!
As your grand opening approaches, you and the franchisor will collaborate on a suitable marketing plan tailored to your local area and budget. It’s wise to partner with your community’s Chamber of Commerce to organize your grand opening as a community event and connect you with other local business owners. While your first day as a franchise owner doesn’t solely determine your long-term success, it’s beneficial to make a strong start, so be sure to maximize your marketing and public relations efforts to spread the word.
Few feelings compare to the excitement of cutting the ribbon on your own business. However, this is when the real challenge begins, so be prepared to work hard—yet remember to savor the moment. Take pride in the effort you’ve put in to reach this stage; you’ve truly earned it.