How to Open a Franchise in 7 Easy Steps

Cody Cromwell
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Do Your Initial Research

Before you start your official search, you’ll want to gather all the information you need to make sure that you’re making the right choice. It’s the first step to ensure that you are happy with the decision you’ve made. And your happy with the franchise opportunity you’re going to choose.

Do Your Initial Research

It’s best to start your search with a thorough knowledge of the desires and requirements of the franchise opportunity you’re exploring, and in turn you’ll better understand what a good franchise opportunity looks like.

Most franchise opportunities come from research (and we make the process even easier by posting our free franchise research pack …just sign up, download the pack and you can start your research right away).

Franchise research is the easy part. So to narrow down the options and search for a franchise that’s right for you, we suggest you do your initial research. And it’s just that. Initial. You’ve already picked a good franchise that you want to explore and you need to start refining it.

Online Research

I highly recommend searching online for research on whether or not you are the right person to become a franchise owner. There are some great websites that specialise in listing franchise opportunities.

You can read all about the business model in franchising and the pros and cons and you will find that franchisee/kaizen offers you more than a job.

Franchise ownership is a big commitment, and it requires you to spend a lot of time carefully researching the opportunity, finding the right location for the business, and managing the company’s finances. Consider talking to someone who has owned or worked for a franchise to determine whether it is a good fit for you.

Remember that you will be making a commitment to that franchise, and the owners have purchased the right to name its location and co-brand the business with the franchisor’s brand. That’s why you will find that many franchise opportunities are introduced through their website. You can check them out by clicking on –see what they’re selling”.

Franchise Disclosure Statement

Attend Discovery Day

The first step to opening a franchise in the USA is attending an event called Discovery Day. As the name implies, it is a day of discovery for you and your business. The venue of the event will also determine much of your next steps.

When you attend Discovery Day, you will have a chance to learn about the franchising industry from leaders in the area. Follow the Free Franchise Seminar at 11am on Day 2 to take advantage of these opportunities.

Visit the workshop to connect with other franchise owners and discuss your ideas.

Attend the Continuing Education Workshop to learn more about emerging business trends and explore the opportunities available to a franchisee-entrepreneur.

Refine your startup business plan and learn how to make the most of your investment in your franchise.

Alternatively, if you are selected to be a featured franchisee on the day of your event, you will have the exclusive opportunity to sell your business idea to potential new owners across the nation.

Review Your Franchise Agreement

Get the Right Franchise Funding

In order to open a franchise, you will need a certain amount of startup money. This doesn’t mean that you have to pay for startup funding (there are other ways to get the money you need). You can also get startup money from family and friends. In fact, it’s a good idea to have a family member or friend who is willing to contribute to your startup if you have any outside funding.

If you are looking for startup funding, you can draw down a credit card or even look into government grants. However, just because you may be qualified for government grants doesn’t mean that you will subsequently be approved. Some people get approved for one government grant, only to be denied for another. Your best bet is to research the funding requirements and look for a funding source that is right for your business.

Get the Right Franchise Standards

Other than startup funding, you will also need to meet some franchise specifications. For example, you will need to have a certain amount of equity. In addition to franchise standards and designated startup and maintenance funds, all franchises also have a minimum equity requirement as well as minimum profitability requirement. This means that even if you have a lot of startup funding, if you don’t meet the franchise’s minimum standards, you won’t be able to open a franchise.

ROBS (Rollover for Business Startups)

Over the past 15 years we have helped many individuals and Franchisees across the United States create their own successful businesses.

You too can be part of our robs Franchise family by learning how to open a Franchise in 7 easy Steps:

  • Pick your Target Market
  • Gather Your Assets (Brand & Patent)
  • Locate your Purchase Agreement
  • Write your Business Plan
  • Finalize your Site and Site Audit
  • Choose your Locations
  • Finalize your Location Survey
  • Choose your Concept
  • Finalize your Franchise Disclosure Document (FDD)
  • Get your financing
  • Set up a Facility
  • Open your doors for business!

The following is an overview of the 7 easy Steps to Opening a Franchise with ROBS Franchise Development.

SBA Loan

The SBA Loan program provides financing for Qualified Small Business Owners and Entrepreneurs with small and startup businesses in a variety of industries, including services, information technology, construction and manufacturing.

The 7 Steps to Opening Your Franchise.

Traditional Bank Loan

Getting the financing you need to open a franchise can be a daunting and time-consuming process. As a result, an increasing number of aspiring owners are turning to the option of obtaining a loan from the Small Business Administration (SBA), under the provisions of the Small Business Act of 1980. An SBA loan guarantees most lenders that their money will be repaid, even if you might not be successful in your endeavor. Loan terms and rates vary, but generally an SBA loan will provide a term of up to ten years and carry an interest rate that is substantially lower than that of your other financing options. Loans will usually require a 20 percent down payment, and can be made at competitive rates, so long as you meet certain criteria. Check out the SBA website for more details on the requirements and procedure.

Franchisor Financing

Most franchisors in the food and beverage industry require the prospective franchisee to finance the franchise fees. This is usually done through a loan from a bank and is secured by the franchisee’s existing business.

Relationships:

Relationships can play an important role in the success of any business venture. It is through relationships that the franchisor and its franchisees build trust to achieve consistency in quality.

Regulations:

Contact the official government department that regulates your region to confirm your specific requirements.

Project:

Be ready to submit your franchise proposal to the franchisor.

Franchise Registration:

The franchisor will require the prospective franchisee to register the business.

Training:

If the franchisor proposes an in-house training of any kind, you should carefully examine the conditions and select participation to ensure that the training is successful and profitable for your business.

Franchise Fee:

Most franchisors will ask the prospective franchisee to pay the franchise fee in various installments.

Training and Support:

The franchisor will provide training and support to ensure the sale and growth of the franchise.

Construction:

The franchisor will provide the facilities to construct the business premises as required.

Other Funding Options

There are various other ways to fund your business. Some of them do not have to be foreseen, though, and can become necessary in case you do not receive funding or loans from your bank.

These include:

  • Saving money
  • Borrowed funds
  • Credit cards
  • Selling belongings
  • Selling bonds or stocks
  • Approaching friends and family
  • Selling services

An individual or business can find various funding options, depending on their availability, capacity, and proposed business.

Saving Money

One of the fundamental ways to start a business is to save up the finances. In other words, you can’t have a business without money to hire, operate, and maintain it as well as fund its expansion.

The more you can save, the more stable your business will be. It is also how you can survive without initial funding. If your business and its services are valuable, you can save up the money later on.

Borrowed Funds

One of the best ways to get your business up and running is to borrow money. Borrowed funds are provided by those who believe in you and your business.

In other words, they are people or institutions that lend you money either as a short term loan or a long term or permanent loan.

Some examples of borrowed funds include:

Loan financing

Choose a Franchise Location

If you’re considering opening your own franchise, the first step is to pick your location. Before you can open a franchise in a new location, you’ll need to know the following information:

Franchise Law Requirements

If you’re considering opening a franchise in your home state, you’ll want to check with your state government. It’s wise to do some research on the requirements.

Vendors, like equipment, uniforms and advertising, vary for each franchise. While you can expect to purchase basic items like uniforms and help set-up, your state may require that you rent or purchase other items.

Franchise Costs

For franchise costs, your location will likely determine an amount of money you’ll have to invest. Cities with larger populations and more options should have more open costs to cover rent, personnel, and advertising. Smaller communities and rural areas may charge less for these expenses.

Franchise FDDs

All franchises also require you to submit a franchise disclosure document (FDD). Although candidates that have the proper paperwork in place to open their own franchise can start to build support prior to submitting the FDD, this isn’t always possible.

Buying vs. Leasing Your Location

This a question that is often asked when considering the options to open a franchise. As with most things in life the choice is really between the devil you know and the devil you don’t. In the case of buying or leasing a location the decision comes down to the amount of money you will spend in the long run.

Buying

While the upfront money you spend to purchase the location is a major drawback, you will save a significant amount of money by owning it. There will be less or no expenses to lease the space including bills, insurance, taxes, and maintenance. If you have the expertise and time to operate the business, you can also turn a profit on the money you put into buying the space. However, if you don’t (or can’t), then you will run the business at a loss. For the most part, buying the space will give you longer term revenue stability.

Take the Provided Franchisee Training

A franchise is an agreement between you and the franchisee that allows you to distribute the franchise products, services, or trademarks to the public, and the franchisee will be providing these products to its customers. If you are offering the franchise, then you will be able to train the franchisee on how to operate the business.

Having a franchise is more profitable than operating it on your own, as the franchisee will be paying franchise fees weekly, or monthly. During the training, you will provide guidance to the franchisee on how to provide the services or sell the products.

After you have received your money, or whichever method of payment the franchisee and you have agreed upon, you will be required to buy into the franchise. A more complex franchising agreement will require you to post a security bond before you begin with the training.

Prepare for Opening Day

It takes a lot of work to open a new business; especially since most franchise owners do it alone. So before you purchase equipment or set up shop, make sure you have your ducks in a row.

First of all, you can’t move forward if you don’t have a location. So get an up-to-date estimate of what it will cost to open and operate your business. Check with your landlord or property manager for availability and inform them of your plans to open a retail store.

While you are gathering information on your necessary startup expenses, spend some time shopping and doing research to find the best location for your business. And when you do, make sure you get a business license and comply with zoning and other equal opportunity requirements.

Now that you have a zoned and licensed location, do some more research to determine which products will be in demand in your area. If you’re a franchise owner, you will also need to determine your franchisee’s support team, skill-set and management team. If you’re opening a store, think about the kind of opening you will do and begin setting up your store with a staff member or two.

How to Plan a Grand Opening

Having an exciting and unforgettable grand opening event can attract new customers to your business. Grand opening events can include a ribbon-cutting ceremony, food and beverage giveaways, special door prizes and exciting activities for children. Event planners may even buy a big screen television to show footage from the big event. One of the best things about having a grand opening is the positive publicity it brings to your business. Plus, it helps established goodwill prior to your grand opening.

While grand opening celebrations bring many benefits to a business, they can be difficult to manage. One of your biggest concerns should be planning an event that’s safe for everyone. Before you do anything, you should check with your local city to make sure your business is allowed to host the event. Although your grand opening event may be a big party, you don’t have to take care of all the details yourself. With the right assistance, you can organize a grand opening celebration that’s exciting, fun and safe.

The following are some tips to help make opening a franchise easier for your business:

  • Don’t be Afraid to Dream Big
  • Finalize the Site Selection
  • Work with an Expert
  • Take a Break
  • Respond to Reviews
  • How to Start with Staff Training

Bottom Line – How to Open a Franchise

Opening a franchise is a dream most people share. Unfortunately, there are plenty of reasons why most people put that goal off … until the time is just right. Here’s why this article is different: No one tells you that starting a business is expensive, and it will take hard work, dedication, and time to see it succeed.

Starting a business is tough … and the challenges don’t stop once you open the doors. With this guide, you will learn the basics of how to open a franchise in 7 easy steps. This guide will help you in the following areas:

How to create a franchise marketing plan Pre-franchise research and site analysis Be sure to read the article in its entirety. It is very informative, and there is an accompanying video as well as a glossary of terms. Begin your journey to success.

Being a franchise lawyer and mediator, I often hear about the difficulty of opening a franchise. Many people get so ruined in their efforts of opening a franchise that they give up all hope of realizing their franchise dreams. The good news is that, if I understand right, there’s no reason for you to think that your dream is lost right now. All you need to do is to get yourself ready to make the best use of your time and money. That’s right, money!

Here’s more your fellow Franchise Attorney with a simple guide on how to start opening a franchise.

Know what you are going to do and why.