You want to be in business for yourself, and you’re exploring owning a franchise business. Then you’ve obviously answered the “why,” e.g., to rescue you from corporate America, to leave a legacy for the next generation, to scratch an itch, but now you’re on to the “how”: What’s the process to get to Grand Opening?
Our guess is you’ve probed the web for information and answers. That’s why you’re here. Welcome. If you’ve searched using key words anywhere near, “How to launch a franchise,” you were no doubt—as we were—overwhelmed by the many links to the steps to be your own boss.
What you’ve learned is instructive, beneficial and all good. Our goal is to boil down the steps and to share hindsight and insights to bolster your decisions, confidence and enthusiasm so that you can comfortably settle into the franchise business of your choice.
• Research—Become an expert on the franchise industry, investigate business opportunities, and know your market. Make a list of concepts/brands that interest you. Engage a free-to-you franchise consultant or contact the franchisor (“zor”) directly.
– Sure everyone has to eat, but the restaurant business is no piece of cake. Just because you consider yourself a handyman, doesn’t signal you can nail operating a home-services business. Be open to whatever is out there that builds off your skill set. Don’t worry about “no experience.” Franchisors prefer those who want to benefit from the systems and procedures they have in place and are acceptable to learning.
-The most frightening prospects for zors are people who style themselves as “entrepreneurs.” The zor wants you to embrace their culture, be a team player, and follow their system—work within the system and the system will work for you.
-Still, Kevin Cushing, President of the Marketing & Print Division for Alliance Franchise Brands says: “Typically you’ll find that some franchise networks have such a rigid operating system and a go-to market strategy that the owners aren’t allowed to put any of their personality into the business. We allow that in abundance.”
-On your initial call with a consultant or with the zor, do not ask, “How much money can I make?” The FTC won’t let them tell you. Save the question for your franchisee calls. Besides, the answer has a lot to do with the effort you pour into the business. Your first question should be, “How do I get the phone to ring or the door to swing?”
-In your search, give franchises that have company stores extra stars. Company stores allow the zor to assess new products, operating procedures, and marketing campaigns. You don’t want to be the tester.
-Also, dole out stars to franchises where the executive team has done what you’re about to do. “I believe that we have a rare understanding and empathy for our franchise owners because our ownership and leadership group were owners of marketing, print and mail businesses as well,” says Kevin.
-The support you’ll need the most will come from your family. Make sure that significant others are welcomed in the sales process and training, and are just as committed as you to make a go of the business.
-During the sales process, the accessibility, responsiveness and openness from the corporate office of the franchise, will be indicative of what you can expect once you become a franchisee.
• Franchise Disclosure Document (FDD)—To protect you, the FTC requires franchisors to provide you upfront with a lengthy, formatted document that addresses 23 “items” from legal history, fees, your obligations as a franchisee, assistance from the franchisor, to financial performance presentations, a list of franchisees, and audited financial statements.
-The financial performance presentations, commonly referred to as “earnings claims,” are listed under Item 19. Zors are not required to include composite earnings from their franchisees. That begs the question, “Why don’t you include an earnings claim?” Additionally, there’s no standard for presenting the numbers. A clue to a zor’s veracity is how the numbers are rendered. Make sure to read the details within the note’s sections. That may add to a deeper understanding of what is being presented.
-When you’re reviewing the FDD, an established and reputable zor will encourage you to seek watchful eyes and advice from your lawyer and your accountant. Add a “good listener” to your team—someone who has no agenda or vested interest in the outcome, who from time to time can help you talk it out.
-Don’t let royalties rattle you. There’s a tangible return on investment in training and ongoing support. And royalties make for a stronger franchisor and support system.
• Franchisee Calls—Reaching out to franchisees to find out how the operating system works in practice and how much money you can potentially make.
-Here’s when you ask, “How much money can I make?” However, the answer has a lot to do with the effort that the business owner pours into the business.
-Use the time and opportunity to connect with successful owners, but also franchisees who are struggling, with managers, employees, and even customers (online reviews). A call can include face-to-face meetings with franchisees and tours of facilities.
-Get a feel for the relationship between the zor and franchisees. Success is a team effort.
• Discovery Day—A day, maybe a day and a half, to meet the home-office “team.” Do they pass the sniff test? Immerse yourself in the culture, ask questions of the people you’ll be relying on, and decide if the operation is as legit as they say.
-Look for gray hair and grit under the fingernails.
-You’ll be able to tell if the zor is rushing to make a sale, or if their priority is a perfect match. Be prepared to walk away.
-Also, be prepared to tell them what you bring to the table, and how that advances their system.
• Franchise Agreement—The rules of the road written by lawyers. It outlines the terms and conditions of the deal and obligations of you and the zor.
-Make sure what you’ve heard and have been promised in the sales process is backed up in the contract.
• Funding—Here the franchisor should be helpful in directing you to financing options and sources. Know what your options are and consider knowledge of funding before you start any journey.
-Be realistic about your finances. Don’t purchase a franchise on a shoestring. Be prepared for a ramp-up period, fortunate opportunities, and unexpected challenges.
• Location—If your franchise is other than home-based, you’ll be looking for space. Here again, the franchisor should provide assistance with “site selection.”
-In real estate it is location, location, location. The same may apply to your franchise business. If you are considering a resale or conversion opportunity this may not apply.
• Training—The difference between launching a business off a cocktail napkin and fundamental to a franchisee’s potential success is comprehensive pre-opening training, ongoing training, and experienced support, when and if you need it.
-Make sure an “elevator pitch” is on the training agenda. When people ask, “What do you do?” you’ll need a short (30 seconds), snappy explanation that could be the difference between a prospect or referral, and a missed opportunity.
– From the get-go build a business plan that includes an exit strategy. Know where you want to go. You’ll make the journey more rewarding, and you’ll be better positioned to exit the business when you’re ready and on your terms.
• Grand Opening—Turn-key guidance and boots on the ground from the home-office team to set you on your way.
-If you’re going to involve family in the business, clearly define roles and responsibilities—how you’ll divide and conquer. Franchising is about a work-life balance. Make sure you can separate the two.
-Franchisors will talk up passion as a sure-fire emotion to achieve success. Pride is a word you may not hear, but pride in your business, your people, and what you’re doing might be a more important attribute. The test will be will you wear a polo shirt with the brand logo to the Chamber meeting, the grocery store, and your kid’s lacrosse game?