A franchise allows a person to open a new business as part of an established brand. If you have considered this and decided that it is something that you want to do, you should first realize that starting a franchise is not easy. There will be a lot required of you. To begin with, you will need to have a business that is established well enough that other people are willing to invest in the brand. Then, you will need a substantial amount of money.
People usually buy into franchises because a lot of the work associated with starting a business is already done for them. For example, the business strategy is already outlined. Technical details such as recipes, product lines, and distributors are already established. However, what is most important to many new business owners is brand recognition. They can maintain a degree of security knowing that many people are already acquainted with their products and have positive attitudes toward them.
Starting a franchise, therefore, requires that you have a business that other people will find worthy of investment. One of the first things that will make a business seem worthy of investment is the success of at least one location. That location should be well established with concerns to customer recognition, customer satisfaction, and operations. You will only be ready to sell franchises once you have a model.
If you are starting a franchise in the United States (US), you will need a detailed disclosure document. This document is a requirement imposed by the Federal Trade Commission (FTC). It is completely unadvisable to ever draft such a document yourself. Disclosure statements must be given to prospective buyers before they purchase your franchise. This document includes information such as fees, investment amounts, and the franchise’s financial statements.
You will need a good accountant. Starting a franchise and maintaining it is generally a financial complexity. The tasks involved not only require special skills but can be extremely time consuming. It is likely you will already be very busy, so do not second guess the need of employing outside help.
You should also join the International Franchise Association (IFA). The IFA has criteria that must be met before membership is granted, and it has standards that must be sustained to maintain membership. Therefore, being a member of this organization will help you gain credibility. Membership can also provide you with benefits as a franchisor.
Starting a franchise is not cheap. It is true that once you start selling franchises you may receive large sums of money. However, you will first need to spend large sums. Make sure you are financially prepared for this venture before you undertake it. Otherwise, the starting of a franchise could be the ending of any financial security you already have.
