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As an aspiring entrepreneur eager to jump into franchising, you likely have many questions and concerns. If so, you’re not alone. From transferring ownership to franchisor obligations and more, understanding the legal and financial obligations of franchising is a critical priority. To make the process easier and less stressful, the International Franchise Professionals Group (IFPG) has created a list of the eight most frequently asked questions from aspiring business owners.

Beginning with a basic understanding of the franchise concept and continuing through all of the necessary steps to become an effective franchise owner, the list of questions below will help answer your most pressing queries. Additionally, IFPG members are available to provide additional consultation and advice upon request.

What is a Franchise?

A franchise is an agreement granted by a franchisor to a potential business owner (a.k.a. a franchisee)that grants the franchisee the right to operate a specific business in a structured way. The franchisor is responsible for setting operational standards and often providing ongoing support and training to the franchisee. Franchising is growing rapidly in the United States as more and more people are seeking to become their own bosses through business ownership.

What are the Benefits of Becoming a Franchisee?

There are numerous benefits to becoming a franchisee. First, franchisees get access to a proven brand that likely already has customers and competitive advantages. They are also able to access the support of the franchisor for training, resources, and operational standards. Franchise owners also have the opportunity to benefit from synergies with other franchisees in the network. That means they get access to collective knowledge and the power of being part of a network of businesses.

What Are the Steps to Becoming a Franchisee?

The steps to becoming a franchisee vary from franchise to franchise. However, the most standard steps are typically outlined below:

  • Secure funding or financing to pay for the franchise business
  • Research different franchise opportunities to identify the best fit
  • Contact a franchisor or IFPG certified franchise consultant to learn more
  • Questions and assess the franchisor
  • Complete the franchise agreement and sign the documents
  • Get the store or business up and running
  • Start operating as a successful franchisee

What is a Franchise Disclosure Document (FDD) ?

The FDD (also known as an FDD or disclosure document) is a document required by the Federal Trade Commission (FTC) and designed to provide a franchisee with every essential item of information necessary to make an informed investment decision. An FDD is required by law to be provided to potential franchisees and usually includes 23 unique categories of information about the franchise. The FDD explains the fees associated with the franchise, how royalties are paid, and the franchisor’s obligations to franchisees.

What is a Franchise Agreement?

A franchise agreement is a legally binding contract that outlines the terms and conditions of the franchise. It is written in a way that ensures everyone has a clear understanding of what is expected. The franchise agreement typically covers topics that include the business structure, license fees, exclusivity rights, how fees and royalties are paid, and the franchisee’s obligations.

Who Can Help Me With The Franchise Process?

Franchising can be a complex process, so it is important to seek out assistance. IFPG certified franchise consultants have the knowledge, experience, and relationships necessary to help franchisees find the right business opportunity and then successfully guide them through the entire franchise process. Franchise consultants also have expertise assessing the viability of small businesses and can help franchisees determine whether their business is a good investment.

What is a Franchise Broker?

A franchise broker is a person who has the knowledge, experience, and connections to help aspiring entrepreneurs find, research, and invest in a franchise business. Franchise brokers are members of a franchise consulting network, such as the International Franchise Professionals Group (IFPG). Together, our franchise broker group members offer a collaborative environment to guide franchisees through the entire franchise process.

What Are Some Common Mistakes Made By Franchisees?

As with any business, there are mistakes that can be made when setting up a franchise. Here are some of the most common mistakes made by franchisees:

  • Not researching the franchisor
  • Not understanding the franchise agreement
  • Choosing a franchise that is outside of the franchisee’s budget
  • Not receiving help or support from a qualified franchise consultant
  • Not understanding the market for the franchise
  • Not understanding the franchisor’s obligations and rights

If you are looking to invest in a franchise, it is important to make sure you are knowledgeable about the process and aware of the common mistakes to ensure a successful investment. At the International Franchise Professionals Group, our mission is to provide guidance and support as franchisees embark on their franchising journey.

If you have any questions or would like to learn more about franchising, feel free to contact an IFPG member. Our certified franchise consultants are happy to answer any of your questions and help you find your perfect franchise opportunity.

Topics:

Franchising,

Franchise Ownership,

Franchise Consulting

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