Interested in Starting Your First Business? Consider a Franchise
Starting a business is a dream for many, but it’s easy to become discouraged. As the number of new businesses continues to skyrocket, you’ll need more than a few snazzy business ideas and a snappy sales pitch to succeed in this highly competitive market. Even though more new businesses are opening than ever before, failure rates remain high. In fact, recent data from the Bureau of Labor Statistics shows that approximately 20% of new businesses fail within two years of opening—while just 25% of new businesses last 15 years or more.
So, what can you do? Should you give up on your dream of self-employment? Absolutely not. Compared to starting your business from scratch, franchising is a far more practical and less risky option. Here’s why:
- You are able to analyze and determine the franchise’s validity before sinking any money into the business. This allows you to be confident that your new investment has a higher chance of success.
- Franchises are well established businesses, meaning they’re already in a condition that allows for immediate operation. The business model already exists and has proven to be successful, giving you less to worry about.
- You experience great support throughout your franchising journey. Not only do you benefit from the franchises’ already successful product and/or business model, you also receive training, operational advice, connections to other franchisees, and premiere industry insights.
- Purchasing a franchise allows you to work with a brand that comes with an established consumer base. This makes it much easier for you to bring in customers since many are already familiar with and loyal to the franchise brand.
- Franchising gives you freedom and flexibility with a lot less risk. Once your franchise is set up and in full swing, you can take a hands-off approach to daily operations, and focus on high-level tasks when it’s convenient for your schedule.
What do you think? Are you ready to buy a franchise? That’s great, but not so fast. Although franchising comes with a lot of advantages, you still have to do quite a bit of legwork to get things going. Since this process may seem overwhelming at first, we’ve put together this helpful guide explaining how to start a business as a franchisee. From financial best practices to deciding which franchise to buy, we’ll explain all of the requirements to start a business!
What Are 9 Tips for Starting Your Own Business as a Franchisee?
If you’re really serious about becoming a franchise business owner, then you’ll need more than a run of the mill starting a business checklist. As experts in the franchising industry, we know the challenges you’ll face, and we also have a ton of advice to offer. To start you off on the right foot, we’ve asked our team to compile some advice they believe all potential franchisees need to know. Without further ado, here are the top 9 things that make a business successful when it comes to franchising.
- Determine if franchising is the right path for you. We’ll be honest, franchising isn’t for everyone. Starting any type of business, franchises included, takes a lot of financing, planning, and determination. Before making a decision ask yourself:
- How many hours am I willing to invest weekly in the business?
- Do I have the funds or can I obtain the funds needed to meet upfront franchise fees and ongoing fees?
- Have I developed the management skills needed to run a business?
- Do my values align with the franchise I want to join?
- Do I like the structure of the organization?
- Is the franchise organization financially healthy?
- Love what you do. What’s the point in running your own business if you don’t love what you do? Yes, metrics and profitability are important, but you’ll get burnt out fast if you aren’t passionate about what the franchise is offering. The more passionate you are about your business, the more resilient and successful you will be as a franchise owner.
- Be strategic. Before investing in a franchise, you need to evaluate if that business can meet the evolving needs of customers and the marketplace. For this, you should do some research to determine which types of franchises are successful now and are likely to remain strong in the future. Taking a strategic approach to choosing a franchise will give you the information you need to assess your options appropriately.
- Start networking early on. Networking allows you to be exposed to upcoming trends, innovations, and techniques for optimizing your franchise business. Although a franchise owner’s manual and resources are helpful, creating a solid network of people in the franchise industry will help you collaborate with like-minded business owners, think outside the box, and grow your portfolio.
- Customer service is everything. Without happy customers, your business won’t succeed. It’s that simple. To maintain a good relationship with your customers, you should not only follow the guidelines laid out by your franchise but also create opportunities to develop meaningful connections. You can do this by planning special events, creating perks like customer loyalty programs, and taking surveys asking for customer feedback.
- Be self-sufficient. When running a business, you must be ready to adapt to whatever challenges come your way. Prepare yourself for fluctuations in the economy and get ready to develop creative solutions to provide the best service possible to your customers. Although your parent company will provide resources to help, your franchise will only be successful if you are independently motivated. You can’t control the world, but you can control how you react to sudden changes in your market. For more information on how to be a self-sufficient business owner, check out the National Association for the Self Employed.
- You need a lawyer. All business owners need excellent legal representation and advice. From combing through your Franchise Disclosure Document (FDD) to purchasing property, a lawyer is there to help guide you through your entire franchise journey. For more legal resources, visit the American Bar Association’s website.
- Prepare for the future. When creating your business plan, your focus should always be centered around long-term sustainability. There are no shortcuts when planning for your business's future. That’s why many business owners consider themselves to be life-long learners. Things will always change, so there will always be room for improvement.
- Get connected with your community. All business owners should aspire to be pillars of their communities. You are establishing your value by donating money, time, goods, or services to local individuals and organizations. These acts will not only improve your connections, but it will also allow you and your employees to give back to the community you serve.
For more resources, check out our business tools page!
How Much Money Do You Need Before Starting a Business With a Franchise?
The amount of capital required to start a business varies widely depending on your situation. Luckily, franchising is more cost-effective than starting a business from scratch because you benefit from the support of a parent company and a loyal pre-established customer base.
Although franchises are often a more affordable option, it still takes quite a bit of funding to get things started. At Franchise Gator, you can search tons of franchising options and sort by level of upfront investment, aka the franchise fee. These levels of franchise fee range from less than $10,000 to over $1,000,000. Although, we should note that franchises with a higher franchise fee often come with more support from the parent company and greater brand recognition.
In addition to paying the franchise fee, you will also have ongoing business expenses to consider. Here are a few franchise business costs examples:
- Building renovation and rent or mortgage costs.
- Inventory and stock costs.
- Payroll for employees.
- Royalties paid to the parent company. These take a percentage of your monthly gross earnings.
- Annual licensing fees paid to the parent company. This means purchasing the right to use the franchise brand’s name and logo.
- Travel expenses for required franchisee training.
So, how do you afford all of this? Before you get too overwhelmed, many funding resources are available to help you realize your dream of becoming a business owner. Here are just a few financing options:
- Franchisor Financing: The right franchising partner has resources to help you get your funding in order. For example, some franchisors offer deferred payment plans.
- Commercial Bank Loans: Bank loans can help you pay for some of these costs if you don’t have the money right now. Although, you are expected to pay these loans off in a specific time frame, including interest.
- Small Business Association (SBA) Loans: Backed by the Small Business Association, these loans have lower interest rates and longer payment periods. Although, they are a bit more difficult to obtain than regular commercial bank loans.
Which Type of Business Is Best for Beginners Who Are Just Entering the Franchise World?
To cut your teeth in the franchise industry, you’ll need to do more than create a list of things needed to start a business. You have to do your homework. When it comes to choosing the right franchise, you should:
- Review the Franchise Disclosure Document (FDD)
- Interview a variety of franchisees
- Visit local franchise locations and learn from the owners
- Visit the franchise organization’s headquarters and meet with upper-level management
Once you’ve completed all of these tasks, it’s time to start shopping around! To get you started, here are a few examples of our most affordable and popular franchises.
Three of Our Most Affordable Franchises: Best Business To Start With Little Money
- Customers are all about convenience these days. And what’s more convenient than delivery? Delivery Developers is an affordable franchise that delivers food to the doors of their hungry and loyal customers. Deliver Club's nationally recognized brand will help you build your own successful delivery business in no time!
- Got a mind for finances? The Lending Network provides comprehensive financial service solutions to their customers. The Lending Network offers excellent training, making it a great business to start with no experience in the finance or banking world.
- Looking for a simple business solution, then Sure Step is perfect for you! Sure Step Non-Slip technology eliminates slip and fall accidents, keeping people safe. From residential homes to big manufacturing plants Sure Step helps prevent dangerous slippery floors at an extremely low cost.
To discover more affordable franchise businesses, simply explore our franchise opportunites page and use the cost filter to search by investment level.
Three of Our Most Popular Franchises
- If you have a flair for compassion, consider SYNERGY HomeCare. SYNERGY is a nonmedical home care provider for all ages and provides nonmedical care for the disabled, the elderly and those recovering from illness and surgery.
- If you consider yourself an ice cream lover, then Bruster's Real Ice Cream might be the right franchise for you. Bruster’s offers a variety of sweet treats handmade to satisfy all hungry customers. And to sweeten the deal even more, they’ve been ranked by Entrepreneur Magazine as a top franchise for the past 20 years.
- Want to work on your physical and capital health at the same time? Then the D1 Training gym franchise might be a perfect fit for you. D1 Training teams of highly qualified coaches, fitness experts, and support personnel to provide training typically reserved for elite athletes at Division 1 schools.
If none of these options tickle your fancy, check out all of our top franchises here!
Ready to Start Your Business? Experience Endless Possibilities With Franchise Gator
We hope this guide has given you the advice you need to start your business journey! For more information, explore the rest of our website. We have hundreds of franchises for sale listed in our directory. At Franchise Gator, you can discover opportunities based on location, investment amount, and industry. We also have a ton of resources for you to explore as well! Take the first step in becoming a business owner and explore your options today.
Most Popular Industries & Categories
As of January 25, 2021:
- Food, Dining, & Restaurants
- Home-Based Businesses
- Low Cost Franchises
- Covid-Resistant Franchises
- Gas Stations
- Self Storage Franchises
- Vending Machine Distributors
- Automotive Shops
- Retail Stores
- Business & Commercial Services