Franchising is an extremely popular way for aspiring entrepreneurs to enter the market and build their own businesses. But for people new to the idea of franchising, a few questions or misconceptions might be stopping you from moving forward with the process.
Let’s look at five common franchising questions and their answers:
How fast is the franchise purchasing process?
Purchasing a franchise is not a decision that should be made in haste—just like opening an independent business. For this reason, the franchise purchasing process usually takes 60-90 days, or more, to complete.
Every franchisor runs their discovery and onboarding processes a little differently. The company might require you to complete a questionnaire and/or an interview before receiving a franchise disclosure document. Once you have that document in hand, you’ll need to wait about two weeks before you can finalize the franchise purchase by signing because of the FTC’s Franchise Rule.
What are franchising fees for?
Almost all franchises charge a franchise licensing fee and possibly other fees when you first purchase the business. Franchise fees are essentially the cost of entry into the franchisor’s established system. They are not the only costs of starting the business. Although every franchise is different, most charge these fees to offset the costs of training you to run the business, getting you set up under the franchise umbrella, and providing ongoing advertising and support.
How can I fund a franchise?
Financing a franchise is very similar to financing an independent small business. There are a lot of financing opportunities available to you, from using your savings, taking out Small Business Administration loans or using your retirement funds through a Rollover as Business Startup (ROBS).
To fully understand all of your options, talk with a franchise funding company that has expertise in working directly with franchisors and franchise buyers. These experts understand the nuances of obtaining startup and working capital funds specifically for franchise business models.
Is there room for individuality in franchising?
Many entrepreneurs want the freedom to grow and shape their businesses the way they want to and might be concerned about being locked into a rigid franchising structure. However, this isn’t necessarily the case.
Franchise systems offer varying levels of independence for their owners. One franchisor might allow you to choose from a range of business lines and focus on what you like best, while another might expect more adherence to the corporate structure. If business individuality is important to you, search for a franchise system that gives you more flexibility. There’s a franchise out there to meet almost any owner’s needs!
How do I start the franchise buying process?
If you’re interested in buying a franchise, you can start by exploring your options on our own via simple online research. Or, you can take advantage of the expertise of a franchise consultant. Franchise consultants are exactly what the title denotes…consultants for franchise buying. They specialize in helping entrepreneurs find the franchise type that meets your needs in terms of what you are interested in, where you want to locate your business, and which ones fit your financial investment and income needs. What’s more, the consulting services of a franchise consultant are usually free for potential buyers.
Tenet Financial Group works with hundreds of franchise consultants to help their clients get franchise funding. If you don’t have a consultant relationship and would like a referral, or if you want to discuss your funding needs to help determine franchise businesses to consider, contact us today!