Your Guide to Financing, Planning and Launching a Franchise


Thinking of starting your own business but don’t want to start from scratch?

Buying a franchise can be a great option for entrepreneurs who want to get started with a proven business model and brand awareness.

Here’s the rub: Funding and starting a franchise can be more complex than starting an entirely new business.

Now that you’ve decided on the franchise concept you want to buy, let’s look at what the process looks like for aspiring franchise owners. Whether you’re a new entrepreneur or a seasoned entrepreneur looking to expand your portfolio, here’s what you can expect when financing and buying a franchise.

Related: Considering Owning a Franchise? Start now and take this quiz to find your goal personalized franchise list that fit your lifestyle, interests and budget.

Analyze the Franchise Disclosure Document (FDD)

Once you have identified a potential franchise opportunity, you can request the Franchisor for the Franchise Disclosure Document (FDD) to support your choice.

The FDD is a legal document that sets out the terms of the franchise agreement and provides detailed information about the franchise system, its financial performance, fees, and other factors that you, the franchisee, should understand.

Make sure you read the FDD carefully and seek legal advice to ensure you fully understand all of the costs and expenses you will face if you decide to proceed.

Related Topic: Top financing tips every prospective franchisee should know

Develop a business plan

Developing a comprehensive business plan is critical to the success of any business – including franchises – as it can help you secure funding. Your business plan should outline your goals, marketing strategy, financial projections, and operational plans.

Best of all, the franchisor may provide a business plan template or guidelines. However, keep in mind that it’s important to customize your plan based on your specific benchmarks.

Related Topics: How to Create a Business Plan for Your Franchise

Focus on securing funding

Now it is a matter of securing the financing. Most franchisors require a minimum personal investment, which can range from 20% to 30% of the total investment.

For example, if the total franchise investment is $100,000, you may need to invest $20,000 to $30,000 of your personal funds. The remaining capital can be raised through various financing options such as loans, grants and crowdfunding.

Some franchisors may offer financing options such as B. internal financing or partnerships with credit institutions that may offer you favorable conditions.

Because every situation is different, you may benefit from consulting a financial advisor to determine the best financing option for you.

Related: What is franchisor financing? Here you will find everything you need to know.

Sign the franchise agreement

Once you have developed a business plan and secured financing, you can sign the franchise agreement.

The Franchise Agreement is a legal contract that sets out the official terms of the franchise relationship. You should review the Agreement carefully and with legal advice as it details franchise fees, intellectual property rights, training, support and more.

Related: The 9 provisions every franchise agreement must contain – and what they mean

Take a franchise training course

you signed! Before you prepare to open your doors, it’s time to train.

The franchisor provides training on the franchise system, operations, marketing strategies and other aspects of franchise management. The training can take place at the franchisor’s headquarters, online or a combination of both.

Start your franchise

Financing and buying a franchise can be a complex and challenging process. Before securing funding, remember to research different options, analyze the FDD, and create a business plan. Then you can complete your purchase, ramp up your operations, and begin reaping the rewards of ownership.

Related: We analyzed mountains of data for thousands of franchises and found the best opportunities for you in 2023 in our 44th annual Franchise 500 ranking.

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