There are a number of different ways to start a business in the United States. While you could opt to open a business on your own, you could also opt to start a franchise, taking advantage of the name and expertise of an already-successful business.
Interested in starting a franchise? Wondering how to do so in a successful manner?
Then read on. We’re going to show you how to start a franchise business successfully.
Make Sure You’re Making the Right Decision
Before you start a franchise, you need to think long and hard about whether or not it’s the right decision for you. While some individuals are well-equipped to start franchises, others are better off starting businesses of their own.
First, you must assess your business acumen. Are you intimately familiar with the way in which a business operates? If not, you might want to gain a greater understanding before taking the plunge.
Another thing to consider is the nature of the franchise you’re thinking about starting. Are you thinking about starting a restaurant franchise despite the fact that you’ve never worked in the food services industry? If so, you should think about going in a different direction.
While your franchisor will offer you some assistance, you will be the primary operator of your business. For this reason, you’ll need to have a thorough understanding of the industry in which you’re working.
If you start a franchise without making these considerations, you could suffer severe financial consequences. Make sure that you’re prepared for what’s ahead.
Designate Your Business Appropriately
When you start a franchise, you have to give it a legal business designation. This designation will affect not only the parameters of your business’s operation but its tax and legal liabilities as well.
While you have the option to start a franchise as a sole proprietor, you’re advised against it. Why? Because, by acting as a sole proprietor, you leave yourself vulnerable to both tax and legal liability.
Instead, you’re advised to designate your franchise as an LLC or corporation. These designations will not only protect you — as an individual — from legal and tax issues, but they’ll also lend credibility to your business. In fact, some franchisors even require their franchisees to designate their franchises as corporations or LLCs.
Study Your Market
You’ve decided that starting a franchise is the right move for you. However, before you go jumping in headfirst, you need to partake in the proper analysis. This will help to ensure the success of your franchise over time.
When partaking in this analysis, there are two things you’ll need to focus on: 1. The type of franchise you’re going to open, and 2. The location of your franchise. We’re going to discuss both of these matters in more detail below.
Determine Which Type of Businesses Excel in Your Area
Businesses don’t exist in a vacuum. They are surrounded by and are in competition with a range of other businesses. Your goal, as a business owner, is to choose the type of franchise that will excel amongst other businesses in your area.
For instance, it might not be wise to open a pizza restaurant in an area containing 50 pizza restaurants. On the other hand, if your area contains only 2 sushi restaurants, a new sushi restaurant might be well-received.
Survey your area’s needs, assess your potential competitors, and open a franchise that will attract customers.
Find a Suitable Location
When it comes to brick-and-mortar businesses, location is hugely important. After all, opening a new business in a popular part of town will create more revenue than opening a business in the middle of nowhere.
Finding a suitable location for your franchise isn’t always the easiest of tasks. For this reason, it’s often wise to pay for professional geographical analysis. A professional analyst will assess your area, determining which locations are the most cost-effective for your particular type of business.
If there’s one thing to be certain of, it’s that franchises aren’t cheap. After all, a proven business model and instant brand recognition are hugely beneficial. As such, they come at a premium.
For this reason, in the vast majority of cases, franchisees will have to obtain funding from sources other than themselves. The key for you — as a potential franchisee — is in finding the right sources.
If you have trusted individuals in your life, you could consider financing the franchise together. While you’ll have to share revenue, you’ll also leave yourself less vulnerable in the event of a failure.
The other option is to take out a business loan. Note, however, that if you take out a business loan, and your franchise fails, you will find yourself in dire straits financially.
Both funding options have proven successful (and unsuccessful) for different individuals. The key for you is to assess your particular situation and make the choice you feel most comfortable with.
Hire an Attorney
Whether you’re starting a business from scratch, opening a franchise, or otherwise, it’s of utmost importance that you hire an attorney. Starting a business exposes you to a wide variety of legal matters, many of which are difficult to navigate without the help of experienced legal counsel.
A business attorney will not only ensure that you’re abiding by rules and regulations, but he or she will also assist in the creation of a business plan, in the choosing of a business designation, and in the handling of your taxes. Not to mention, should you ever face a lawsuit (and you might), your lawyer will be able to defend you.
In most cases, it’s wise for business owners to have an attorney on retainer. By having an attorney on retainer, you are able to forge a deep working relationship.
Learn More About How to Start a Franchise
While the above-reviewed tips cover the basics of successfully starting a franchise, they comprise only a handful of the many tips available. Looking to learn more about how to start a franchise? If so, we here at OpenWorks have you covered.
With thousands of commercial cleaning franchises located throughout the US, we know everything there is to know about starting a successful franchise.
Find more tips on our blog now!