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How Do I Start My Own Franchise?
| StreetShares Blog

How Do I Start My Own Franchise?

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official opinions, policies, or positions of StreetShares or any of its affiliates.

According to the International Franchise Association, franchises have not only created 7.6 million jobs, but they have also added over $400 billion to our economy. Depending on what your business goals are or what your business model entails, franchising can be your path for continued business growth. Saying that you want to franchise your business is one thing. Knowing where to start is quite another. While the process is one that requires focus and attention to detail, the process will become streamlined if you come out of the gate with your best foot forward. Here are things to consider before deciding to go the path of franchising.

First Things First, Though:

Before we dive into things to consider once you have fully committed to franchising your business, we need to make sure that you can franchise your business. There are two fundamental questions to ask yourself before you begin to go down the path of turning your business into a franchise.

  • Can your business model be easily replicated? Starting out, this is one of the most critical questions to ask yourself and a question that you need to be able to answer honestly. Remember, the purpose of franchising is to take your business model and replicate that model. If there are too many moving parts, you may need to make adjustments.
  • Can you afford this route? It does not need to break the bank to turn your business into a franchise, but you need to live in the reality of what these costs will be so you can ensure you can afford this. After interviewing franchise attorneys and franchise development consultants, you should have a clear understanding of what your project will cost.


1. Seek Expert Advice

Whether we are talking about an attorney, a consultant, or an accountant they need to be experts in their field. You want people who have made a living off of setting up and working with franchises - not people who do it occasionally. This is extremely important during the process of turning your business into a franchise. You will work closely with your attorney to complete a Franchise Disclosure Document. The Franchise Disclosure Document is a legal disclosure document that must be given to individuals interested in buying a U.S. franchise as part of the pre-sale due diligence process. In addition, you will need to set your pricing, create your agreement for franchising, and determine the intellectual property (anything you have created, trademarked, patented, etc.). The International Franchise Association has additional resources outside of your attorney, but you should speak with legal representation to cover all bases. You want to protect yourself and your business so try not to cut costs on legal representation.

2. Know Your Numbers

We touched on this at the onset of this article, but I cannot stress the importance of this. You need to be keeping a detailed record of all costs so you don't find yourself in a cash flow problem. You should know precisely what each expert is going to charge you for their services initially as well as on a continual basis. In the beginning, you will have your legal fees as well as filing fees for your business with the state's attorney general. Your accountant fees will cover your initial setup, but franchised businesses must be audited annually regardless of profit. Bear in mind, franchises that open up do not give you extreme wealth just by being open. You will make the bulk of your money on things such as royalties, which will not happen overnight.

See also: Best Small Business Accounting & Finance Software for VOSBs without a CFO

3. Think Through the Process of Exactly How Your Business Works

Step by step, every single detail. Do not leave anything out because you think it is irrelevant. Franchising works because the process of running the business becomes just that, a process. You will have the act of training your franchisees, who will then train their employees, and so on. You cannot leave a detail out, or you risk compromising the integrity of the business.

From FitSmallBusiness.com: How To Write A Business Proposal In 5 Easy Steps

4. Details Matter

Details include things such as a logo, business cards, uniforms, signage, staff training schedule, and criteria for hiring employees at locations. Develop an operations manual so that you do not have to redo this every time you have a new location and your franchisees clearly understand the process.

5. Protect What You Have Earned

While this has become a slogan of sorts within the military community the last few years, the same is true for your franchise. You need to protect your brand at all costs. You need to be of the mindset that you have a brand. Your brand represents you in every aspect- culture, personality, how you treat your customers. One of the most significant risks you will take when you decide to franchise is allowing other people to replicate you. Clear guidelines and operating procedures need to be set for your brand. Messages need to come from one source at all times throughout the entire organization. Every detail of what goes on is something you need to know. I know, this sounds like a lot! Probably because it is, but it is imperative that you get these things done correctly from the beginning so that your brand and business does not fail- or develop a poor reputation.

6. Monitor Your Assets

When we hear the word assets, our mind often goes to money. While this is an important asset to manage, that’s not quite all of what we are talking about at this moment. Do not allow the visual and creative assets of your brand to be used in any way without your permission. This includes things like social media content, pictures, and videos. You should be monitoring the representation of your brand on social media platforms not only posted by your franchisees but by your customers. Sometimes there are no truer ways to view your business than through the eyes of your customers- keeping a close eye on how you’re being talked about on social media can help you take care of small issues before they become big problems.

Read next: Equity vs. Debt Financing: Which is Right for My Small Business?

7. Look Beyond the Capital

You may have people reaching out to you for franchising options which meet the requirement for capital, but that does not mean they are the right person for the job. You need to be picky.

Determine what the interviewing process for your franchisees will be and stick to it. Do they have the experience you would need? Do they have the business acumen and leadership skills to run a business? Remember that your franchisees are a reflection of you. This is your business and your brand. You do not want to become synonymous with poorly run establishments! The pickiness is not because you are trying to be a stickler- you need to protect your business so it has the chance to grow. You are also setting a standard for your franchisees to follow when they begin the process of staffing their stores.

8. Chart Your Path of Growth

Do you want to grow solely within your state? Do you want to grow within the continental United States? Do you aspire to go internationally? All of these questions may seem like they are light years away in the beginning, but to forge ahead, you have to know where you are going. This will allow you to be placed on the path of steady, measurable growth. Proof of concept is going to be an intricate part of the success or failure of your franchise. Just because your business has been open for a year and doing well, does not mean you are ready to begin franchising. You need to make sure you have measured, quantitative information for people.

9. Location, Location, Location

Is there an area where you already have brand recognition? How accessible will these locations be? Will you be conducting a market analysis to see what the competition is in the areas you are considering? Your initial location(s) should likely be reasonably close to home but not too close to one another that they end up competing with each other. Remember that you will want to stop in and visit each location from time to time so as you begin to expand beyond a comfortable driving distance, pick places that are convenient to airports.

10. Set Up a Support System

You will want to have face-to-face time with your franchisees above and beyond the initial interview. Determine and implement how you will communicate with them, the frequency you will have routine communication, and how they can reach you if needed. Consider making a standing date for recurring calls, especially in the beginning. Also, set up a way for franchisees to know and talk to one another. They are all embarking on something new, so why not try to do it together!


Whether you're opening your first location or your fifteenth, stay ahead of the game by having your finances in order. In our free ebook, "The Basics of Financing," we cover everything you need to know and prepare to have your best chance of getting the business funding you need. Download it here!

Learn the Basics of Financing

This communication is provided for informational purposes only. It is not intended to be an advertisement, a solicitation, or constitute professional advice, including legal, financial, or tax advice, nor is StreetShares providing advice on any particular situation.

Topics: Veteran Small Business

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