You have decided to purchase a franchise but are not sure where to start. The process can be overwhelming, but fortunately there are lots of resources to walk you through the steps, including associations, books, consultants, existing franchisees, informational Web sites and message boards. The following are key steps in purchasing a franchise:
1. Know where you stand. Before selecting a franchise concept you need to fully understand not only your interests, background and business ability but your financial position. What is your net worth? Do you have any liquid assets? How about your credit score? How much money are you willing to lose? Have you ever managed employees? Do you like people? Knowing your budget and interest and skill levels will enable you to select a franchise business at which you will be most successful.
2. Research franchise opportunities. Unless you have a specific company in mind or are using a franchise broker or consultant this could be a lengthy process. There are dozens of franchise Web sites and hundreds of franchise opportunities. When researching concepts you will need to consider your market and the demand for a specific product or service within that market. If the target area is oversaturated with a concept or the idea is too progressive or different to be accepted in that community, you will have to keep on searching until you find the right franchise. Review all franchisors’ financial documents and talk with existing franchisees before making your decision.
3. Get financing. Once you have made your selection, you will probably need financing. There are numerous options, including conventional bank loans, SBA guaranteed loans and home equity loans. Some franchisors offer their own in-house financing. For less expensive franchises like home-based business franchises you may not need to borrow money. Some franchisees charge the franchise fee on a credit card.
4. Build franchise/outfit store. If your franchise is a store, you may have to build it from the ground up or simply outfit an existing location with the necessary equipment, furniture, signage and décor. Find out how long this process takes on average so that you can adequately plan your grand opening.
5. Get training. In order to run the business you will need training and an operating manual. Your franchisor should provide some form of training.
6. Hire staff. Depending on your franchise concept you may need to hire a staff. Before your business opens you will want to post signs and run an ad advertising openings. Make sure you have done reference checks before hiring an employee.