How to Start A Franchise Business In 2022

How to Start A Franchise Business In 2022

by Editor

Starting a franchise can be a hefty task, especially for young entrepreneurs who can only rely on critical thinking and a fresh mindset instead of hands-on experience. With COVID-19 running rampant and causing problems for businesses everywhere, more and more young entrepreneurs feel they can’t take the world on their own anymore.

At this point, the mind glances at franchising opportunities. There could be a lot of problems along the way, but on the other hand, you get a good business model and professional mentorship. If you want to know more about the responsibilities and benefits that come with opening a franchise business – definitely keep reading.

Pros and Cons of Franchise Businesses

When you’re new to managing a business, you tend to oversee certain issues more experienced professionals would prevent. This is where a franchise comes in to help you. In essence, a franchise lets you borrow its business model and trademarks, so instead of learning from mistakes (which can be costly when starting a new business), you can direct your energy towards an already successful gig and reap the benefits.

Advantages of Starting a Franchise Business

  • Developed business model and mentorship

Like copying answers on a test, getting a franchisor to support you means you don’t have to start your business from scratch – they will provide you with a business plan to follow, and in most cases, a franchisor will also take care of marketing. On top of that, you will always have a business mentor to turn to when faced with a problem you can’t solve on your own.

  • Better financing opportunities

Business owners need money to start. Franchises are no different. You still need a certain amount of funds to start your business. If you decide to join a franchise, you’ll find it way easier to convince investors to trust you with their assets. Your franchisor will already have good relationships with scores of influential people in the business community, making it easier for you to show other professionals why they should invest in your business.

  • Brand recognition

In 2022, successful marketing can be the fulcrum that leverages your business. The worldwide web grants everyone an abundance of choices, so a strong brand identity is crucial in setting a successful business apart. Working with a franchisor, you get to adopt and grow under an already established brand.

  • Less risky

One of the most significant franchise benefits for young entrepreneurs is that the product you choose to trust and develop has already passed its testing point and shows great ROI to those willing to follow their franchisor’s guidelines. Owning a franchise business is an excellent way to mitigate start-up risks and leaves less space for rookie mistakes.

With all this in mind, you’re probably asking yourself, “Why am I even considering? It sounds great!”. Unfortunately, franchising has its downsides, like all good things. It’s up to you to decide whether the benefits outweigh the costs. The most common problems new franchisees face are:

  • Financial issues
  • Poorly skilled employees
  • Ignoring the franchise guidelines
  • Miscommunication between franchise and business
  • Inept franchisors

Research Franchises and Locations

Give yourself enough time for thorough research of franchise options. When starting in a familiar area, you can pretty much tell what business niches ought to work out better. If you need help, you can always find a franchise consultant to guide you through choosing the right franchise for your qualities. You can also check here for some extra information on making wise financial decisions.

Pick out the franchises that catch your eye and contact them about their franchising opportunities. Remember to ask questions like:

  • What kind of experience do they have as a franchisor?
  • What part of the expenses are they willing to help you with?
  • How much do start-ups usually cost to their franchisees?
  • What kind of support does the franchisor provide?
  • How much freedom do the franchisees have?
  • How long does it take for franchisees to become profitable?

Franchise experts Fantastic Services Group recommend that you check out each potential franchisor’s active franchises. Are their business partners happy? Do they answer your questions in the same manner as their bosses?

Once you choose, you’ll have to formulate an action plan to present to your potential investors. In franchising, initial expenses could go over what your savings can cover. Possible funding options a new franchisee can take advantage of include:

  • Bank loans
  • Local business government grants
  • Personal loans

Once you secure your initial funding, you have to think about a location for your business. Depending on the type of franchise you’re about to work with, you might need a different size premise. Franchisors usually take part with recommendations about size and good location. On top of that, you can choose whether to buy, hire or lease your property based on the financial extent of your initial investment. If you decide on a business location on your own, you’ll have to check with your franchisor to make sure they agree with your choice.

Legal Regulations and Permits

Having a Proprietary Limited Company (Limited Liability Company outside Australia) can make you look more professional in front of your franchisor. It also helps a lot with obtaining all your necessary legal documents.

You need several different types of licensing agreements and permits before you start your franchise business. Depending on your particular business type, possible permits you might need are:

  • General Business License – required for all types of business.
  • Sales tax permit – necessary for all kinds of businesses that involve selling goods.
  • Health permit – all industries that involve food preparation require a health permit.
  • Fire Department permits – must-have for establishments open to the public and involving large groups of people spending time at the same location.
  • Building or construction permit – if your plan for renovating your premise before opening to the public involves changing the building structure, you’ll need a permit from the local authorities.
  • Zoning Permit – in some areas, local regulations can prohibit some businesses from operating in specific locations. If you want to settle your business in such a location, you’d have to apply for a Zoning Permit.

Failure to comply with local authorities and obtain all necessary permits and license agreements can have you closing shop soon after opening day. The government fines for franchisors who neglect regulations can be pretty high. Moreover, your franchisor can liquidate your contract if you do not comply with licensing requirements.

Every business niche has to comply with different regulations for legal documents. Usually, there are additional requirements based on your city and country. Communicate with your franchisor to make sure you don’t miss anything.

Review and Sign your Franchise Agreement

Franchisors bring a ton of paperwork, but don’t let that scare you! Before you get any legally binding papers to sign, you will receive a franchise disclosure document (FDD). Inside, you will find information about all possible initial fees, a financial breakdown of your estimated initial investment and a sophisticated prognosis about your budget and business target during your first six-to-twelve months.

Once you review the FDD, your franchisor will provide you with their complete franchise agreement. Review it carefully. The franchise agreement will contain your franchisor’s terms of service, lease parameters, possible restrictions etc. It’s always a good idea to hire a lawyer and review the agreement with them. They notice technicalities most people tend to overlook, and they can help you better understand your franchise agreement overall.

Don’t be quick to worry if there’s something small you don’t like in your franchise agreement. Most franchisors are pretty flexible when it comes to negotiating more minor terms. Again, a lawyer at your side will help you best understand your situation and what parts you can try to change.

On the other hand, a franchise agreement that seems easy to negotiate could be a bad sign. When a brain is in trouble, franchisors are prone to accept drastic changes to save their businesses, which contradicts the idea of a franchise providing you with a solid, carefully crafted business plan.

Take all the time you need before you sign the agreement – inspect every angle and try to view the document from each side’s point of view. If everything checks out – go ahead.

Hiring People and Proper Training

You made it this far – you signed the franchise agreement and got yourself a lovely location. Next up, you need to hire staff and make sure they receive the proper training. Be mindful of the different employment laws when hiring.

As a franchise owner, you will be responsible for improving your business location. Once you get your construction permit, you might have to hire a professional building contractor to prepare your premises for opening day. While that happens, you need to open several job offers and recruit people to work for you.

Owning a franchise business, you will be provided with a combination of theoretical and practical training experience to help integrate your new employees quickly and proficiently. Your employees will learn everything they need to know about the service or product you’ll be offering, as well as different customer service guidelines. You will probably have at least one experienced franchise manager and a detailed handbook for the business you’re helping grow. On top of that, franchisors usually provide their partners with special software designed for their particular business needs.

Opening Time!

You finally got here! You did your research; you chose your franchise, picked a location and hired employees. The time has come to open to the public. As a part of a bigger business, you can rely on your franchisor’s brand identity and predetermined ads or signage to help promote your opening day. Make sure to invite all your friends and family, and on top of that – invite members of different business networking groups in your area. Make sure to talk to every person you know in your local business community.

Spreading the word about your new business will make potential customers aware of the new marketplace option you are offering. With some companies, you can also do a “soft” tryout opening to smooth all the edges out and later have a “grand” opening where you invite as many people as possible. You could also arrange for a franchise consultant to join you on your big opening day and advise you with whatever they seem fit.


Congratulations! Your business is alive and kicking. Your job from this point on becomes the fulcrum to your level of success – you have to motivate your employees, make sure they know all they need and are treated with respect. Anything less, and you risk tripping on the first rock along your entrepreneurial journey.

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