Multi-Unit Franchise Experts

Franchise professionals reviewing how to get started on their franchising journey

Owning a Franchise

The decision to invest in a franchise business is an exciting one. It offers the path to career and financial freedom, allowing individuals to own their business and unleash their potential. People come to the International Franchise Professionals Group (IFPG) to explore franchise options, examine the franchise business landscape, and learn more about the process of becoming an owner. As the premier franchise consulting network with more than 1,300 franchisors, franchise consultants, vendor members, and brokers, IFPG offers aspiring business owners guidance and insights through every step of the franchise journey.

But with so many facets to consider, many people have numerous questions about investing in a franchise business. Below we’ve laid out the answers to the most frequently asked questions to get you on your way to becoming a franchise owner.

What are the Steps for Owning a Franchise?

The process for owning a franchise tends to vary depending on the franchisor and the type of franchise opportunity. However, most prospecting franchisees can typically expect the same basic steps in the franchise process.

The first step is setting up an initial consultation with a franchise professional who can review your specific situation and advise you on the types of franchises that might fit your needs and investments. From there, your franchise broker will talk you through the various franchise opportunities available to you, and may even introduce you to specific franchisors and franchisees for additional insights. Additionally, they can help you define your budget and develop a plan tailored to your specific goals and objectives.

The next step in the process is doing extensive franchise research. This includes researching the financials, executive team, and maintaining a pulse on the industry through various trade publications, websites, and other resources. Additionally, investigate the franchise disclosure documents, franchise agreements, and the franchisor’s track record to ensure the fit is right for you.

At this time, you are likely to receive a call with a franchise representative to get a full breakdown of the franchise you are looking into. You’ll want to ask lots of questions throughout this process, including how the franchisor trains and supports its franchisees. The great part about owning a franchise is having an experienced franchisor to guide you every step of the way as you launch your business.

After honing in on a few franchisors, the due diligence portion begins. Here, your franchise broker from IFPG will help you validate franchisor claims, make sure you fully understand your contract, and verify the franchisor’s management team. Although this can be a long, arduous task, it’s a crucial part of the franchise process to make sure the franchisor is a legitimate business and is not operating in an unethical manner.

The last step is negotiation. This is a process wherein your goals and objectives are discussed with the franchisor and a franchise agreement and/or term sheet is drawn up. Once the terms are agreed upon, the franchisor typically sends out the franchise agreement to a franchise attorney for signing. Once all documentation is signed, the franchise is deemed official and you can start the process of launching your business.

What Is the Difference Between Franchisors and Franchising Agents?

Franchisors and franchising agents serve very different, yet important, roles when it comes to franchising. Franchisors are the original business owners of the distributable franchise business who facilitate the licensing of their business to the franchisees. Here, franchisors are responsible for setting out the terms of the franchising business agreement, collect franchisees’ fees, and offer operational support and brand recognition for the franchise.

Franchise agents—like brokers from IFPG—play a supportive role for aspiring franchisors. As franchise agents are experts in the franchise industry, they often have access to a wide range of information and resources to make the franchise process smoother. Most franchises agents are independently owned and operated therefore the services provided may widely vary from agent to agent. Ultimately, their role is to provide guidance and advice while helping individual franchisees acquire the right franchise for them.

How Much Does It Cost to Invest in a Franchise?

The cost of a franchise varies greatly: some are very expensive, while some may be less expensive and cost more in monthly or annual recurring fees. The upfront cost for a franchise depends on the size and scope of the franchise, though typically you can expect to pay anywhere between $10,000 and $200,000 as an initial investment.

The costs typically include the fees for the initial franchise fee, as well as the franchisor’s support and the costs associated with setting up your business—though additional fees such as leasing or purchasing a location, or purchasing operational equipment may also need to be taken into consideration.

What Support Do Franchisors Offer Franchisees?

Support is a key factor in the success of each franchise business, as most franchisors offer comprehensive training and marketing programs to help franchisees succeed. The franchisor typically provides franchisees with the initial start-up materials and tools to get their franchise business going.

These training materials can include operations manuals, marketing materials, videos, and more, all catered to the specific franchise model. Additionally, they can offer consultation and continuing education services to ensure franchisors stay on par with best practices and industry trends.

The marketing support is just as important for franchisees. Here, the franchisor can offer website services, promotional materials, and assistance to franchisees in developing local marketing campaigns. These campaigns are important to help build public awareness of the brand, thus driving more business to the franchisee.

Can I Transfer a Franchise License to Someone Else?

In most cases, the answer is yes. However, depending on the agreement between the franchisor and the franchisee, the transfer process can often be complicated.

The franchise agreement is the first area to look at when considering transferring a franchise license. This document should outline who is eligible to be a new franchisee, which could include family members, franchises owners transferring to different locations, as well as new owners with similar qualifications as the original franchisee.

The franchisor will also need to approve a prospective franchisee. This could include an investigation into their background and qualifications. They may also ask them to sign a new agreement before the transition is complete.

Conclusion

Investing in a franchise is a great way to take control of your career and financial success. At IFPG, we provide aspiring business owners with the guidance, resources, and training to make informed decisions when investing in a franchise business. Whether it’s helping you set your budget and determine the right franchise for you, walking you through the process of due diligence, or negotiating the terms of the franchise agreement—we’re here to help you experience the power of franchising.

Topics:

Franchise Ownership,

Franchisors,

Franchise Consulting

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