How to Start a Franchise

May 17, 2017

Franchising your business model may look like a great way to grow your organization, but it’s a complex process that often takes two to three years before selling your first franchise. You will want to have $50,000 to $100,000 in working capital to cover the costs of setting up the paperwork and going through the legalities. Then, once you’ve sold a franchise, it might be another year before you see any profit. It’s not for the faint of heart.

Once of the best resources for starting a franchise is the International Franchise Association. You will also want to work with legal professionals and other experts who make sure you meet the requirements. Here are some of the considerations in a franchise start up proposition:

  • Your model or systems will need to be completely and fully documented and developed. This will allow for a franchisee to follow it in setting up the franchised unit. You need to have a training system in place to help the franchisee find success.
  • Accounting documentation is absolutely key. The franchise company will need audited financial statements for the legal requirements. Generally, you will need an accountant to provide these statements. Get advice on setting up the structure of the franchise company. Make good decisions in the beginning and you’ll be more successful in future years.
  • The legal documents required by federal and state law are many. You may have a notebook that is two or three inches tall of paperwork that the Federal Trade Commission and state governments require to offer franchises. You will want a legal advisor who knows franchising rules to help you get through this hurdle.
  • Your mindset may need to change. First, you won’t be focusing on your own unit as much. Secondly, franchisees are not employees. You can’t treat them as such. You have to find ways to motivate the franchisees to maintain the same systems and quality that you expect from your unit.

It’s rewarding to start a franchise and in 5 to 10 years, it can certainly be profitable for your organization. But it is a long process and takes a lot of determination and grit. You’ll be working just as hard as you did when you started your business, and you’ll need a good team of people behind you who know your business and can get franchisees on board. Think carefully about making this step to find the success you want. Make sure you can pay the price now to reap the rewards later.

Want to start your own franchise with 7-Eleven?

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