The key steps to becoming a franchise owner
You’ve decided you want to become a franchise business owner. But where do you start? Buying a franchise is a complex process with specific steps that need to be followed. It can be a daunting prospect, but millions of people have been down this road before and made a success of their venture.
You’ll feel more confident about your franchise journey when you understand the different stages and what’s required of you. Remember that each franchise has its own protocol, but this guide, compiled in collaboration with F45 Training, highlights the most common points in the franchise buying process.
Research the franchise
If you already know which industry you’d like to invest in, start exploring all available concepts and opportunities online. Make a note of a particular franchise you are interested in, then do a comprehensive background check on the company. Try to locate all content pieces it has been featured in online. This will give you a clearer picture of the reputation of the franchise. Consulting an industry association, such as the Better Business Bureau, could also give you access to the company’s track record, including any serious problems that have been encountered by the franchise you want to buy into.
Apply to become a franchisee
If the franchise has a satisfactory track record, you can then submit a request for consideration. You may enquire about the opportunity via telephone or email with a development representative. Some franchises let you contact them via their website; for example, those interested in an F45 franchise for sale can submit an application online via a contact form.
The phone interview
Initial contact from the franchise will be a basic exchange of information over the telephone to find out what potential you have. This is your chance to make a great first impression, as the franchisor will ask you questions about your experience in the industry, your goals, and how you plan to raise capital and establish a customer base.
The in-person/video interview
You will be required to visit headquarters or sit down for a video call for a more in-depth interview. The purpose of this second interview is for the franchisor to further determine if you are qualified to become a franchisee. During the in-person or video interview, the franchisor will provide more information about the opportunity and answer important questions that weren’t covered during the initial contact.
Review the Franchise Disclosure Document (FDD)
Following the second interview, you will be presented with a Qualification Form, on which you note your personal details and financial capability, as well as the Franchise Disclosure Document. It is important to carefully study the FDD as it contains information regarding the operational and financial obligations you must adhere to when you own a franchise.
Get your finances in order
At this point, you’ve learned what it costs to buy the franchise. Now, it’s time to prepare yourself to do so. Determine which funding you are able to raise, provide from your own pocket, or borrow–making sure you budget for the set-up costs and day-to-day operations. Luckily, due to the higher success rate of franchises compared to other start-ups, it’s easier to secure capital from banks.
Attend Discovery Day
If you qualify financially and the franchisor is confident that you’re the right fit for the company, you will be invited to what is known as Discovery Day. The franchisor expects you to have completed all due diligence, so make sure you have a pretty good understanding of the business model, and your obligations, duties and responsibilities by this stage. Discovery Day usually includes a tour of the franchise headquarters, meeting all key personnel, and visiting the training site.
Sign the Franchise Agreement
If both parties feel that you’re completely ready to join the franchise, the franchisor will send you the Franchise Agreement for you to sign and submit with all the necessary documentation. You will also be required to pay the initial franchise fee at this stage. Before you finalize the purchase, be sure that a franchise lawyer has reviewed the Franchise Agreement to ensure that the transaction proceeds smoothly and to both parties’ expectations.
Once you’ve signed on the dotted line, all that’s left is deciding on a location, attending franchise training, and finding the right employees before you’re all set to plan your unit’s grand opening.
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