How to Start a Franchise In 7 Steps

Starting a franchise can be a big undertaking. But it can come with a number of benefits, including pre-established brand awareness, a framework for success, and built-in customer base. For those entrepreneurs looking to franchise, knowing where to start and having a plan is critical.

• As a franchisee, you need to know what to expect and the types of costs you will encounter along the way. In this blog, we cover seven foundational steps you can take to start your own franchise.

What Is a Franchise?

A franchise is a business arrangement where the franchisor grants the franchisee a license to access their processes, trademarks, and proprietary business knowledge. This allows the franchisee to sell the product or service under the franchisor’s business name without the franchisor having to manage every location themselves.

Franchising offers a proven path for entrepreneurs to start a business locally, while leveraging the strengths of an existing brand. From establishing a solid business plan to navigating legal requirements, the journey to franchise success begins with careful planning and strategic decision-making.

How to Start a Franchise In 7 Simple Steps

#1: Plan and Research Franchise Opportunities

The first step in determining how to franchise a business involves a few key questions:

• Do you have a future vision for your business?
• Do you have the capital to start a franchise?
• Which industry is right for your franchise?

These questions can only be answered by you after evaluating and determining how franchising fits with your specific goals and objectives. Use tools like FranchiseDirect or FranchiseforSale.com to determine potential franchise prospects by location, investment level, or industry.

Begin by exploring various franchise opportunities to find a market that matches your interests, skills, and financial capabilities. Evaluate factors, such as market demand, competition, and brand recognition.

#2: Pinpoint Spend and Cost Budget

Starting a franchise is a large financial commitment. The initial investment to start a franchise can range widely, from $10,000 to $5 million, with most falling within the $100,000 to $300,000 range. The exact amount varies based on factors such as industry, location, and the specific type of franchise. Focusing on developing a finance plan early on can aid in the overall business venture.

#3: Set Business Plans and Goals

Even though many parts of the franchise are already defined, you still have control over its most important aspects. Creating a business plan will describe how your specific franchise will achieve the overall goals and objectives.

• Conducting industry research, local market trends, and creating a franchise business plan is essential for becoming a successful franchisee.

Developing this plan involves thorough research, a clear business idea, a robust financial strategy, effective marketing and sales plans, detailed operations planning, and a capable management team.

#4: Get a Franchise License Agreement

According to franchise laws, a franchisor is obligated to provide a Franchise Disclosure Document (FDD) before offering or selling a franchise. At the federal level, and in numerous states, there is no mandate to formally register an FDD.

However, in the 13 states, known as franchise registration states, a franchisor must register its FDD with the state’s franchise regulator before offering or selling a franchise within that state. In the nine states designated as franchise filing states, a franchisor must file a notice with the state regulator before offering or selling a franchise in those states.

#5: Form a Business Entity

Limited liability companies, or LLCs, provide business owners with liability protection, lower startup costs, and greater flexibility for management and taxes compared to other business structures, making them an attractive choice for many small business and franchise owners. Consider forming an LLC as you begin your journey to franchise ownership.

#6: Choose Location and Business Space

If your ideal franchise requires a physical location, choosing the ideal business location goes beyond aesthetics. It’s about selecting a competitive spot that fosters business growth, fits in your budget, and meets local and state regulations.

This decision can ultimately attract more customers, enhance operational efficiency, and ensure compliance with legal requirements. Consider factors like demographics, accessibility, and proximity in setting up a successful franchise location.

#7: Find and Hire Employees 

Once you have a budget, business plan, and location established, you need to start planning to hire employees. For franchise businesses, hiring and retaining the right employees can be the difference between a thriving franchise business and a struggling one.

Your franchise recruitment strategy is an essential part of your future business success. Implementing a strong recruitment strategy with cost-effective solutions, like JazzHR, is an effective way to ensure efficient time-to-hire processes for potential applicants.

Improving recruiting speed, quality, and efficiency is an ongoing endeavor. But it’s also an effort that is much easier for franchises like yours to continually make progress with when using an intuitive, easy-to-use ATS.

With JazzHR, you can automate and optimize the entire hiring process so you can compete in real time for tap talent and make great hires so you can focus your time growing your business and your people.

Start the Journey to Your Franchise Today

Now that you know the fundamentals of what it takes to start your own franchise, you can begin your journey to doing the hard work. While becoming a franchisee takes significant planning and investment, you can begin knowing that you will have the strength of a well-known brand behind you and a framework that will guide your efforts. And with the right hiring software, like JazzHR, you can streamline hiring and find the best talent fast for your growing business.