You’re well on your way to becoming a franchisee. You’ve already explored the first steps:
- Working with a consultant
- You’ve done extensive research
- You’ve attended a discovery day
- You’ve consulted with a number of franchisees
So, what’s next? In this article, we’ll break down and explain the next steps in pursuing your franchise business of choice.
Obtaining a franchise disclosure document (FDD)
The FDD was originally introduced to protect franchisees from being misled into parting with their life’s savings by dubious franchisors. In the information age this has become less of an issue as outlandish promises can be fact-checked, nevertheless the FDD is still an important document as it tells the prospective franchisee everything they need to know about the business they are investing in. It will cover several key points, from the company’s history and key persons to fees, estimated investments costs and financial statements.
Upon receiving the FDD, you’ll have a set amount of time to digest its contents and raise any comments and questions with the franchisor before proceeding.
The next steps are:
Establish a location
Work with the franchisor to find a commercially viable location. The territory within which you can operate – including its boundaries – should be clearly defined in the franchise agreement. Bear in mind that the franchisor will have ultimate approval on the proposed location.
Choose a franchise and secure finance
It’s at this point in the process – once you’ve fully researched and qualified the opportunity – that it’s time to make the all-important decision of which franchise to buy into.
Once you’ve made your decision, it’s time to work on a business plan that will help secure you the funding you need to cover your investment.
Sign the franchise agreement
The franchise agreement is the legally binding agreement between the franchisee and the franchisor which will govern your rights and obligations. The exact conditions will vary from business to business and some franchisors may be more open to negotiating terms than others.
If you are unsure with any part of this agreement it’s a good idea to seek advice from a lawyer experienced in franchising.
Acquire insurance and permits
Depending on the market you have chosen to operate in, there may be further documents and requirements you need to obtain – for example, regulations at a city or county level. Your chosen franchisor should be able to navigate you through any additional legal and regulatory hurdles and ensure compliance.
Before opening the business you will need to make any necessary hires. The level of staff needed will naturally depend on the franchise so there is no hard-and-fast guidance in this regard, however ensure you are receiving all the appropriate training and support offered by the franchisor as this will no doubt prove essential.
Open for business
It’s now time to open your franchise business. Ensure, via advertising, that the market is aware of your grand opening. This is typically something you will receive focused support from the franchisor on (signage, local advertising, in-person support, etc) and will be paid for as per your franchise agreement.
Oftentimes franchisors will insist on a ‘soft opening’ prior to the grand opening to ensure any teething problems are ironed out and subsequent marketing spend can be fully justified.
Want to know more? request a free copy of our franchising guide (part 1) here