How To Start A Franchise

Many entrepreneurs prefer opening a franchise instead of their own business. While it is easy at first, starting a franchise could be intimidating if you are a beginner. There are lots of benefits of a franchise. And, it includes marketing support, brand value, and a proven track record.

However, starting a franchise needs you to research with proper diligence. After all, you are just hopeful and franchise companies are bigger brands. So, how to start a franchise? This step-by-step guide helps you get a better understanding of what you should do when starting a franchise.

open franchise

Step 1: Initial Research

What is the type of business you are interested in? Do you have enough knowledge about it? You have to address these questions, and much more similar to that. In short, you need to learn more about franchising. Choosing a franchise that falls in line with your business goals is crucial. Moreover, the franchise should suit your skills and personality.

After you have explored your options, choose one that fits your needs. The total cost of your desired franchise is another important aspect you need to research. Also, you should have proper knowledge about the existing regulations and policies.

Step 2: Self Evaluation

After you have some idea about the franchise of your choice, you need to self-assess yourself. What appeals most about this franchise business? Are you willing to work for long hours daily, and even on Sundays or other holidays? Can you follow every rule of the business without deviation?

How much money are you willing to open the business? If you don’t have too much money, what are the options for having a loan? These are the most important questions you need to ask yourself before heading on further.

Step 3: Get Help From a Franchise Consultant

While you may have answers right under your sleeve for different issues, certain important things need guidance from outside. Franchise consultants can help you professionally guide through the process.

A franchise consultant has specific knowledge about the industry and can relate complex topics to you in a simple way. Also, they keep you safe from experiencing pitfalls that you may encounter without their guidance.

Step 4: Attend a Discovery Day

When you choose a franchise, the franchisor invites you to Discovery Day. This day is all about meeting the franchisor along with other potential franchisees. While it can take place at a local outlet, most of the time it happens at the corporate office. The franchisees present there will have in-depth knowledge about what the company has to offer.

And, they can even ask questions. Also, the franchisor would like to know whether you are enthusiastic about their services or products, committed, and adhere to their policies. So, ensure that you make the best out of Discovery Day.

Step 5: Form a Corporation or LLC

File the articles of corporation to form the business structure that you will be operating under. You will need to pay any fees associated with filing for it in your state. You can check with your state's Secretary of State website for details.

Step 6: Write a Business Plan

A well-written business plan means a greater chance of approval on your business loan applications.

Learn how to create a powerful, custom-made business plan with this online course. No experience is required, and it comes with plenty of examples, templates, and support from experienced professionals.

With a great business plan, you can find a lot of financing options to choose from.

These include SBA loans, bank loans, ROBS, franchisor financing, and other funding options. 

Step 7: Choose the Right Franchise Funding

Before signing the contract, make sure that you have the required funds to cover your franchise-related expenses. In general, franchisors want you to pay them a franchise fee along with the signed contract. After that, you have to present your business plan to potential lenders.

Keep in mind that you need enough cash to cover all your expenses before your business turns a profit. And, in most cases, it could be months after opening.

If you'd like to learn about how to obtain funding for your business from your bank, this short 25 minute video is sure to help → click here.

If you are having trouble obtaining funding from your bank, you can build strong business credit fast, within 12 months. Learn how by taking this business credit building course

Business Plan Course

Step 8: Review and Sign The Agreement

If everything goes well, the franchisor presents you with the agreement. The franchise agreement is a formal contract that gives you the authority to open a franchise upon agreeing on a set of rules and regulations. However, it is wise to keep a lawyer aside to help you with the franchise agreement.

Watch out for the promises made by the franchisor during Discovery Day and whether they reflect in the contract. If you find any kind of differences between the written contract and verbal promises, bring them up. Moreover, negotiate the terms if you need to.

Step 9: Choose a Location

If you are planning to operate in a low-traffic area with no complementary businesses around, how can you get customers? On many occasions, the franchisor will set certain parameters for your business location and that would be reflected in the agreement. They might even assist you with site selection. Most of the time, you need approval from the franchisor about the location before moving forward.

Tip: There are secret investment strategies to purchase commercial real estate with no cash or credit. You can get free details, just put in your email address, to learn more → click here.

Step 10: Obtain All Important Permits and Insurance

Every industry has its own set of permits and insurance for opening a business. Regulations by county, city, state, etc. vary. As such, the franchisor has the required knowledge of the necessary permits and insurance needed for you to open a business center.

Also, it is a good idea to check with the local authorities to avoid confusion later. Again, you can take help from a consultant or go through the official websites that have references to the right documentation you need.

Step 11: Hire Staff and Take the Franchise Training

The staff you need for your franchise depends on its type. With the right interview questions, you can be sure to hire the right people for your team. Reduce your interview prep time and stress with this interviewer's guide that includes over 600 interview questions, ready to use interviews, evaluation forms, and more → click here

Next, it is important to take the necessary franchisee training provided by your franchisor. A good training program allows you to know more about the services or products.

Also, they provide training about marketing, bookkeeping, creating reports, and many more. The training might last for up to 2 weeks. A copy of the different franchise operations manual is presented during the training as well.

Step 12: Prepare For a Grand Opening

With everything in the right place, getting prepared for the opening day is the final step to starting a franchise. Before the grand opening, inform your potential consumers about your new business and your location.

Franchisors often provide defined processes for ad campaigns, signage, and other initiatives required for the initial boost in the business. A corporate trainer is appointed during the opening days.


When you are planning to open a franchise, it is important to go through the franchise agreement and disclosure document. Also, keeping a lawyer close at hand is effective for a smooth business transaction. Opening a franchise has enabled thousands of people to achieve their dream.