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Basics of Starting a Franchise Business


Buying a franchise is a choice that a lot of first-time entrepreneurs opt for in order to provide their business with a head start. On the one hand, running a franchise provides you with an independence that you’ve always dreamed of, while, on the other hand, it gives you an assistance of having a major brand name behind you. This alone is what provides franchises with a somewhat higher success rate than regular startups and small businesses. Combine this with the fact that buying a franchise often costs less than starting your own business and you’ll see no reason why not to do so with your next idea. Here are several basics for you to consider before doing so.

Ask some basic questions

The first thing you need to do is inquire a bit about the franchisor that you’re about to reach out to. You need to know what they are like, how much will it cost and how much time it will take until your business starts making some results in this particular industry. Other than this, you need to answer some less general questions like what are your keys to success, what is your end game and what are the risks. Due to the fact that you’re starting a franchise, it’s also worth asking what kind of help you can expect from a franchisor.

Get the funding

In the previous section, we mentioned the issue of cost, so, now that you know how much money you need in order to get everything started, you can look for a way to secure funding. Going to a bank or a credit union is the most logical first step, yet, there are other ways to tend to the issue of crowdsourcing. Keep in mind that doing so is an option even on a limited budget. For instance, dipping into your 401(k), looking for SBA loans and other methods might be worth taking a closer look at.

Look for some professional guidance

The next thing you need to understand is the fact that starting a franchise is a lot less unique process than starting an independent business. While this statement may have a negative connotation, this is actually a good thing, seeing as how a first-time entrepreneur can get a business model to follow. In fact, some companies are so well-versed in franchising that they have a specialized team that helps franchise companies stand on their feet. This is one example of the perk of having a protection of a larger brand name behind you.

Different franchisors offer a different kind of assistance but this shouldn’t hold you back as an entrepreneur. Think about it, as a first-timer, a newcomer to the business world, you’re already at a disadvantage. This means that you need all the help you can get. So, prior to starting out, make sure to inquire what kind of help is the franchisor willing to provide. This may end up being a huge factor for your franchise’s future success.

Standard business expenses

Keep in mind that, while you’re enjoying the protection of someone else’s name, you’re still running a business on your own. This means that you have to provide the location, the equipment, the signs, the inventory, and the working capital, on your own. Nonetheless, your franchisor might be willing to help. You see, the way in which you run your business affects their reputation as well, so they might offer you a slight “allowance” to do some improvements on the infrastructure of the building. This will help with the uniformity of the business which, down the line, benefits their brand. Also, while this will help you out financially, it won’t be enough on its own for any kind of major business operations.

Don’t postpone it

Sure, a grand opening is a huge deal and some guides suggest that you might even want to spend as much as 20 percent of your first year’s marketing budget on it, however, timing is what matters the most. Don’t postpone it, due to the fact that your business needs to become operational (and profitable) as soon as possible.


Of course, it’s only fair that we mention the fact that starting a franchise also has some downsides. First of all, you’re limited in form of creativity, due to the fact that you can’t deviate from some features of the business model. Moreover, a controversy or an issue plaguing another franchise may affect your business even if you’re doing everything right. Nonetheless, if you pull off everything that we’ve just talked about, you might find that it’s all still worth it.


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