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How to Start a Franchise Successfully

Starting any new business involves weighing your options carefully, and one of the first decisions you’ll need to make is whether to open a franchise or build a company from the ground up.

While a franchise still requires an investment of time, money, and energy, it does come with several benefits that minimise the risks you face as a new business owner. Exploring how franchises operate and what you’ll need to do to get will help you create a business plan that fits your goals.

What Is Franchising?

Franchising involves opening a business in a new location that already has an established owner and operating system. Many businesses offer franchisees licenses to sell their goods and services while using the company name and logo. In exchange, you pay the business owner a fee for being able to use their name and products.

One of the biggest benefits of opening a franchise is that you’ll be starting off with brand awareness that generates a positive sense of trust within your community. The general idea is that new customers will be drawn to your franchise by good experiences that they’ve had with the brand in the past. In fact, if you think about any fast food chain in your area, there’s a good chance that you’ve encountered a franchise.

If you’re considering opening a franchise, then it’s also good to know that establishing a new business in your community is good for the economy. Being able to give back to your community is another benefit of choosing this type of business model while making your dreams of entrepreneurship come true.

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What Financial Elements Should You Consider Before Starting a Franchise?

Like any business, opening a franchise will come with costs that you need to consider before you commit to a company. While you want to find a franchise that fits your ability to make the initial investment, you’ll also want to look at the investment from a wider lens, including the long-term prospects.

Plan to Pay the Franchise Purchase Fee

Franchise purchase fees can be as low as a few thousand pounds or reach into the millions. At first glance, purchasing one in a lower investment range may seem like the ideal way to get started. But you’ll want to consider this strategy carefully, it has been documented that success rates tend to go up for franchises that require a higher initial investment.

Make Sure You Have Enough Minimal Liquid Capital

Liquid capital is simply the assets that your business has that can easily be converted to cash if a need arises. Mutual funds, stocks and even savings accounts can all beconsidered liquid capital, since you could access it for funding at a moment’s notice.

Most franchises require a minimum amount of liquid capital that is based upon the anticipated operating expenses for your business. For instance, the majority of franchisors will require you to havesix months of liquid capital available to help you overcome any challenges that you may face during the first year of starting the business.

Be Ready to Pay Franchise Royalties

Royalty fees are the primary reason a company allows another business owner to use their brand. When you sign your franchise ownership agreement, commonly you’ll agree to pay the franchise company a royalty fee that is based upon your business’s profits. Although, there are some franchises that do not charge a royalty fee.

Most royalty fees are paid on a monthly basis, and you can expect to pay anywhere from4% to 12% or more. This fee will be in effect for as long as you operate the business.

Explore Potential Additional Operating Expenses

Buying the franchise is only the beginning when it comes to figuring out funding for your new business. You’ll also need to pay for general operating expenses that include covering the rent or mortgage on a commercial location to pay for supplies and wages.

One benefit of starting a franchise is that you can rely on the parent company’s prior experience with operating their business. Talking to other franchise owners of the same brand can give you a clue as to what you should expect to pay your employees and cover regarding repairs on frequently used equipment.

As you explore the anticipated operating expenses, keep in mind that some may be different from the other franchisees due to cost-of-living differences in your chosen location. For instance, you’ll want to budget more for utilities in areas where the cost tends to be high for all property owners.

How Do You Get Started?

Going into the process with the right perspective sets you up for success. Now that you’ve decided to become a franchise owner, it’s time to learn how to get started with finding and opening the right one.

Taking your time to work through each step of starting a franchise carefully helps you to avoid potential costly mistakes. You’ll also find it easier to gain a strong reputation for being a successful business owner when you make sure that you do everything right as you prepare to open your new franchise.

Research to Find the Right Type of Franchise to Fit Your Interests

If you first think about fast food when thinking about franchises, it is for good reason. Fast food franchises have long been the most popular franchise type in the UK and abroad. Also very popular are limited service or casual dining restaurants. These typically offer people the ability to pay for their food before they eat, and they don’t usually involve servers who cater to customers at the table. Full-service restaurants also maintain strong demand.

However, franchising is much more than food! Franchise opportunities in the UK abound in several different industries from retail, health and fitness, and salons to home improvement, maintenance, and more. With so many options, you might find it challenging to figure out which one is best for you to open.

There are several ways to choose a franchise. Naturally, it’ll be easier to be successful if you have passion and a deep interest in the franchise you select. While you don’t necessarily need to be a professional weight lifter to open a gym, it could be beneficial to have at least been a member of one at some point.

You will also want toconduct some market research in your area. Adding another gym to a town already saturated with many similar options might make it harder to be competitive. Similarly, adding a new fast food franchise to a growing area that lacks one of the same type could help you find instant success by meeting needs within the community.

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Learn as Much as Possible from Other Franchise Owners

The best business advice tends to come straight from the people who are already living your dream. Take some time to talk to other franchise owners in your community. You might reach out to a franchise owner at a networking event for business owners in your area, or you could even pop into a show to speak with an owner that tends to be heavily hands-on regarding the operations of their business.

In addition, franchise exhibitions and conferences are held frequently throughout the year. Attending one of these larger-scale events can expose you to franchisors and franchisees of businesses that you may not have heard of before. You can also get insight into the latest developments regarding franchise ownership at these events, such as discovering different markets to explore.

Create a Strong Business Plan

A solid business plan can help you to obtain funding for your new franchise. You might also need to produce your business plan when you are working with city councils to procure licenses to open a business or to build a new location in certain zoning areas. A strong business plan should outline the basic costs and anticipated profits that you expect to generate. You might also choose to include some facts from your market research that show how and why your franchise is beneficial to the community.

Select Your First Business Location and Building

As you’ll quickly learn, franchise companies can vary significantly regarding how much they require new franchisees to follow specific guidelines. But you can reasonably expect that a franchise company will have a few specifics outlined regarding where and how you create a new location.

Many franchises haveset territoriesthat only allow for one owner to set up shop within the boundaries. These guidelines are meant to prevent unnecessary competition among franchise owners, who can typically benefit from this arrangement. Your franchisor might also require you to build a new location to fit specific architectural design plans and equip it with appliances and furniture that fit the brand.

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Connect With a Franchise Solicitor

Franchise agreements typically last for 10 years or more, which means that you’ll want to be careful to avoid making a mistake that could impact your life for a decade or more. A franchise solicitor specialises in making sure that everyone is on the same page regarding the agreements that they sign.

In thebeginning stages of opening your business, a franchise solicitor can help you to read the fine print and negotiate agreements on key points that impact your success as a business owner.

While much of what you read may seem like legalese, it is critical that you understand every word before you agree to sign any contract or put forward a substantial amount of money. Working with a solicitor can help you to avoid costly misunderstandings that could alter how you feel about opening a specific franchise.

Once you’ve started your franchise, you’ll still want to keep your franchise solicitor around. Occasionally, you could run into issues regarding compliance with the agreement, or a franchisor might initiate changes that impact business operations. Having a solicitor to call helps you address developing issues before they spiral out of control.

You’ll also want to work with your franchise solicitor when it’s time to renew your franchise agreement. Over the course of 10 years or more, many things can change. Your solicitor can help you negotiate the cost of royalty fees or even set up an agreement to open an additional location to expand your business.


Taking time to carefully plan your next steps is critical for launching any successful business endeavor.

Franchises offer new business owners an amazing opportunity to benefit from operating underneath an established company. Remember, every franchise is different and doing your due diligence is important for your success. While it may take a significant time investment to carefully research companies and connect with a solicitor, the effort will be worth every dollar as you watch your franchise’s profits rise.

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