Are you considering a franchise opportunity? We have often equated buying a franchise with the nautical theme of being a captain of a ship. Business owners seek control and independence. Your leadership and ability to assemble a solid team and will be a significant factor in your success. Don’t reinvent the wheel, surround yourself with professionals who have guided many others on similar journeys.
Below is a typical timeline an entrepreneur will follow to become a franchisee:
Your goal here is to match your unique capabilities, skills and resources with two to four franchise opportunities that you can see yourself owning and operating.
Call Existing & Former Franchisees
The most important step in researching a brand is talking with existing and former franchisees (and not just the ones suggested by the franchisor). Find them, talk to them and learn about how the system really works.
Draft Business Plan/Projections
As you start to narrow your search, begin to fill in the blanks of your projected revenue and cash flow. What should the numbers look like in 6 months, 1 year and 3 years after you open?
Legal Review of the FDD & Franchise Agreement
Be sure you understand the contract you are signing, the fees that will be charged and could be charged and what happens if things don’t go as planned. Don’t sign a franchise agreement without discussing it with your attorney. Learn more about our FDD review services.
Attend Discovery Day
Meeting the management team and seeing the franchisor’s headquarters is an important step in your due diligence as you get closer and closer to making your final choice.
Before you commit, you need to be sure that the numbers in your business plan and projections are realistic and meet the expectations of your lender. You may not be able to secure financing before you buy; however, you should at least be comfortable with how you will finance the project.
Finalize Entity Choice and Ownership Percentages
Talk with your attorney about the best entity choice and iron out key partnership and/or operating agreement provisions with any partners in the new venture.
Sign the Franchise Agreement and Pay the Franchise Fee
Make the decision and pull the trigger. You can’t build a business until you take this step. Everyone who has done it understands the anxiety and stress of making a final decision, but you eventually have to do it if you want to own a franchise.