Category: Franchises >> Basis of Business Franchises

How Do I Start Franchise?


Buying into a franchise lets you get into business for yourself however, not by yourself.


With a franchise, a small business gets the name recognition, the built-in client base, a market-tested product or service, as well as a team of experts to offer training and advice. All this ultimately means lower financial risks and higher prospects for the success for a business. Because of these advantages, franchises have become a popular option for both rookie businessmen and women.


Franchise
An important step for a small business is to decide whether or not to go into business at all, as going into business by oneself can be a risky venture. However with a franchise, you can start a business from scratch, but with the perks of having everything readily available to you. One of the biggest mistakes you can make is to hurry into business. It is important that you clearly understand your reasons for going into business, and to determine if owning a business is right for you. Every business whether it is an independent venture or a franchise requires hard work, dedication and sacrifice.

So what exactly is a franchise? A franchise is a legal and commercial relationship between the owner of a trademark, service mark, trade name, or advertising symbol and an individual or group who wishes to use that identification to start a business. In this business relationship the franchise governs the method of conducting business between the two parties. Generally speaking a franchisee sells the goods or services supplied by the franchiser, and meets their quality standards.

This is a business partnership based on mutual trust between the two parties. The franchiser provides the business expertise such as marketing plans, management guidance, financial assistance, training, etc. that would otherwise not be available to the franchisee, if they went into business for themselves. There are primarily two forms of franchising:

  • Product/trade name franchising and
  • Business format franchising
In its simplest form, a franchiser owns the right to its name or trademark and sells that right to a franchisee. There are plenty of franchise options available in the market today. Some examples of franchises include cleaning service franchises, pet tender franchises, financial support service franchises, directory publishing franchises and food chain franchises.


How do I start a franchise?
Before one can start a franchise it is important that you do your homework and research your market thoroughly so that you know what you are getting into. To start a franchise, it is vital that you:

  • First, investigate all the franchise opportunities available to you by visiting franchise trade shows or by contacting a franchise agent. Also talk to family, friends or relatives who have set up a franchise, or who know some one who has set up a franchise. It is good to get as much information as possible from fellow franchisees, as not all franchises are good investments
  • Second, talk to franchise owners that are in a franchise similar in to the one you would like to invest in. Ask them if they are pleased they are with their decision, and how well their business is doing. Is it meeting their expectations? Also ask questions about the franchiser and how responsive it is. It is important to determine the integrity of the franchiser you are interested in doing business with.
  • Third, consult any and all advisers. Have an accountant review the audited financial statements the franchiser presents you with, and bring in a lawyer to help review all the legal documents before you sing them.
  • Fourth, thoroughly read the Uniform Franchise Offering Circular, which is a disclosure document in which the franchiser must release certain information such as, any and all administrative, criminal or civil litigation currently pending or completed against the franchiser involving allegations of fraud or misrepresentation. It is a recommendation of the FTC that all franchisers supply a UFOC to prospective franchisees. Also make sure to verify and confirm the UFOC facts. Do a background check on the history and experience of the franchise and its employees.
  • Fifth, compare other franchises. Look for franchises similar to the one you are interested in investing in, and see how well they are managed and financed.
  • Sixth, know and be fully aware of all the terms and conditions of the purchasing contract you are about to sign.
  • Seventh, research as much as you can. Buying a franchise is a complex process and should be approached with caution. The more information you know, the better it is for you. Remember, only you can determine if owning a particular franchise is right for you.
When starting a franchise it is key that you evaluate yourself and see if a franchise is the right business investment for you. Investing in a franchise should not be taken lightly as it can be a risky business. It is important that you consider all the facts before you make a decision to invest in a franchise.




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