Retail franchises offer a unique and compelling opportunity for aspiring entrepreneurs to own and operate one or more store locations of a familiar brand. For many, deciding to invest in a retail franchise lets them be a part of a brand that means something to them—whether it’s their favorite fitness chain, clothing retailer, pet-related service provider, or something else entirely. It’s a broad field, with plenty of opportunity, is what we’re trying to say.
When most people think about retail franchises, they inevitably picture familiar brick-and-mortar stores, fast food chain restaurants, and the like. This is accurate for many of the biggest retail franchises, such as 7-Eleven, the UPS Store, and similar operations. There is, however, another type of retail franchise that is increasingly popular among franchisees, and it involves online franchises.
What Is an Online Franchise Business?
True to its name, an online franchise business is simply one that can be operated without requiring a physical storefront or in-person personnel. Instead, the online franchise business essentially serves as a digital storefront. In other words, it’s an online hub for potential customers to learn about and engage with the brand and, ideally, purchase their goods and services through simple online transactions.
What Are Some of the Advantages of Franchising an Online Store?
For franchisees, the most significant online franchising advantages center around cost. More specifically, investing in an online (or work-from home) franchise minimizes overhead costs. Instead of having to invest in real estate for a brick-and-mortar store—as well as the ongoing maintenance it will require over time—you just need a domain name and/or website to serve as your virtual storefront.
It’s worth noting that whether a franchisee opts a brick-and-mortar or online franchise, they will still need to cover some costs related to advertising and marketing, website development and maintenance, and probably some staff. However, an online franchise typically requires a considerably smaller staff than its non-online counterpart. Of course, the parent company is invested in its franchisees’ success, so you can also expect plenty of direction and support along the way!
How Does an Online Franchise Work?
Whether it’s selling products, services, or both, an online franchise generally works in the same way a brick-and-mortar franchise would. Here, it’s important to note that the phrases “online franchise” and “e-commerce retailer” are not exactly interchangeable, even though they are often seemingly used as such. Consider this difference:
- By definition, an online franchise is simply a franchise that engages with its customers and does its business via the internet (as opposed to a physical storefront). By investing in an online franchise, the franchisee gains the ability to use an established brand and related trademarks, and to sell its products or services to customers through a digital storefront. Online franchises often center more around selling services than products, but that’s not always the case. At FranchiseGator.com, you can browse a wide range of online (or home-based) franchise opportunities across popular categories like:
- Rather than selling a parent company’s goods or services online, an e-commerce franchise centers more around providing key services like product distribution as well as shipping and logistics. In other words, rather than focusing on producing or selling goods and services to customers directly, e-commerce franchises offer services to help companies get their products to customers in the most timely, efficient, and cost-effective manner possible. Some examples of e-commerce franchises available today at FranchiseGator.com include:
How Can You Franchise an Online Business?
Franchising an online business is probably easier than you think, but that doesn’t mean the process is necessarily foolproof. Before we wrap this blog up, let’s look at the most important steps involved—and the keys to running a successful online store as a franchisee.
Step 1: Consider Your Main Objectives and Interests
Before you’re ready to jump right into retail franchising, you should first take some time to reflect and take stock of what you’re really looking to accomplish. Ask yourself questions like:
- What industry or industries am I most interested in being a part of?
- Is franchising right for me, including the dynamic between franchisee-franchisor?
- Are there any existing brands or franchises I’m especially interested in bringing my talents to—or am I open to lesser-known (and potentially more affordable) opportunities?
- Will I be content running an online business, or should I also consider brick-and-mortar franchises?
If you still have questions about franchising in general, check out our Franchising FAQ.
Step 2: Research and Evaluate Opportunities to Ensure a Good Fit
Next comes a much more exciting stage of your journey: evaluating potential franchise opportunities. The best franchise opportunity is going to be one that not only aligns with your interests but that also is in demand.
At FranchiseGator.com, it’s easy to see what opportunities are currently available to purchase, and to make easy comparisons between them to find the best fit. You might want to start with our list of the Top 100 Franchises of 2023—or you can browse franchises by industry or category or required investment. As you find franchises you’re interested in, click the “Request FREE Info” button to learn more about them.
Step 3: Form an LLC or Corporation
Forming your own LLC or corporation helps to insulate you from any personal liability that may arise as you move forward with your online franchise. One of the main ways it does this is by keeping your personal assets and business assets separate from each other, rather than entangled together. If you’re unsure whether an LLC or corporation would be more appropriate, this Investopedia article offers a concise overview of each.
Step 4: Start an Application
When you apply to own an online franchise, the focus shifts from your interests and objectives to your qualifications as a potential franchisee. This important step helps to ensure perfect alignment between both the franchisee and the franchisor, which is essential for the success of an online franchise.
During this step, you’ll need to be prepared to discuss things like your financial situation, education, business background, and so on. During the application process, you can also ask questions or express concerns you have, or that may arise along the way. You may also be asked to provide additional material, like a franchise business plan that outlines your goals as well as your intended strategies for achieving them.
Step 5: Secure Financing
Investing in a franchise can cost anywhere from $50,000 to $1 million (occasionally even less or even more, depending on the franchise). Assuming you don’t already have the total required investment sitting in an account somewhere in order to comfortably self-finance, you’ll probably need some sort of additional funding.
For many franchisees, it makes sense to either secure a loan or work with investors, which you can learn more about via the U.S. Small Business Administration. You can also use Franchise Gator’s quick Fundability Assessment to learn more about the specific options available to you.
Step 6: Make It Official by Signing a Franchise Agreement
A franchise agreement is a highly-detailed and legally binding agreement that outlines the relationship between the franchisee and the franchisor. Once you receive a copy of the proposed agreement, take your time to comb through it carefully. You might even consider inviting a trusted advisor or business attorney to take a look, especially if you have any questions or concerns about the terms that are outlined within the document.
Franchise Gator: Franchise Opportunities to Fit Your Lifestyle, Budget, and More
If you think franchising sounds like the right fit for you, you can start your search at FranchiseGator.com. There, you’ll find franchises across a wide range of industries, investment levels, and more. Whether you’re interested in online retail franchises, home-based online franchises, or you aren’t entirely sure, the perfect fit might just be a click or two away.