Thinking about becoming a franchise owner? You’ve officially taken the first step by beginning your research. Follow this guide to understand the process and the business itself and determine if franchising is right for you.
Defining Franchising
Franchising is a business model in which the owner of an established brand — the franchisor — grants the right to operate a business using their brand, systems, and intellectual property to another individual or entity, known as the franchisee. As a franchisee, you pay fees and royalties to the franchisor in exchange for the right to operate under the established brand and receive ongoing support.
Those fees provide you with a proven business model, operational systems, marketing strategies, training programs, and ongoing support. You benefit from established brand recognition, reputation, and a higher likelihood of success compared to starting an independent business from scratch.
Franchise agreements typically outline the terms and conditions of the relationship between the franchisor and franchisee. This includes the rights and obligations of both parties, franchise fees and royalties, territory restrictions, product or service standards, advertising requirements, and termination provisions.
Franchising offers several advantages to both franchisors and franchisees. Franchisors expand through market penetration with reduced capital investment. Franchisees benefit from operating a business under a recognized brand, receiving training and ongoing support, and having access to a proven business model.
Financial Outlook of Franchising
Naturally, as you consider franchise ownership, you want to ensure that you are making a wise investment. The International Franchise Association’s 2023 Franchising Economic Report this year projects that the overall number of franchise locations will increase by almost 15,000 units, or 1.9%, to 805,000 units in the U.S. Employment is forecast to reach 8.7 million. The total output of franchised businesses will increase by 4.2% to $860.1 billion in 2023.
The Process of How to Become a Franchise Owner
Becoming a franchise owner involves many steps. Here’s an outline of the overall process:
Self-assessment: Start by assessing your personal interests, skills, and financial resources. Consider the industries or types of businesses that align with your goals and values. Franchises exist across various sectors, so it’s important to choose one that suits your background, interests and skill sets.
Research and selection: As you dive deeper into how to become a franchise owner, conduct thorough research to identify potential franchise opportunities. Look for established franchise systems with a proven track record of success. Consider factors such as brand reputation, market demand, franchise fees, ongoing royalties, training and support, and the franchise agreement. Attend franchise expos, visit franchise websites, and reach out to existing franchise owners for more information.
Financing: Determine how you’ll finance your franchise investment. Explore options such as personal savings, bank loans, Small Business Administration (SBA) loans, or partnerships. Prepare a business plan and financial projections to present to lenders or investors if needed. Some franchisors provide financing opportunities or can direct you to third-party lenders. Being associated with a recognizable brand is advantageous to securing financing.
Contact franchisors: Once you have narrowed down your options, contact the franchisors directly to express your interest and request additional information. Typically, you’ll contact the franchisor by filling out their online form.
Franchise application and approval: Complete the franchise application provided by the franchisor. Think of this as you would a job application. They will review your application and conduct background checks and financial assessments — your credit score and net worth are essential in this step of the process. When exploring how to become a franchise owner, understand that some franchisors may require interviews or meetings to assess your experience level and overall suitability as a franchisee, including your financial qualifications. This is a competitive industry, especially for established brands, which is why you are “awarded” a franchise.
FDD: At some point in the process — exactly when varies by brand — franchisors will provide you with a franchise disclosure document, or FDD, which contains important details about the franchise system, including financial information, support, and legal obligations. Review the FDD carefully and seek legal and financial advice if necessary. Legally, the FDD must be given to you no less than 14 days prior to you signing an agreement.
Discovery Day: The next step in learning how to become a franchise owner leads you to what’s known as Discovery Day. You’ll either travel to your chosen franchise brands’ corporate headquarters to learn more about the brand and its operations, or this may be conducted online. This allows you a deeper look at the brand and provides the franchisor a chance to ensure you’d be a good fit. It’s an ideal opportunity for you to ask questions and gain insight.
Approval/legal and Financial Review: If approved, you will receive a franchise agreement to review and sign. Engage a franchise attorney to look over the franchise agreement and other legal documents. They will ensure you understand your rights, obligations, and any potential risks associated with the franchise. Consult an accountant or financial advisor to evaluate the financial aspects and projected profitability of the franchise.
Training: Once you’ve signed the franchise agreement, you typically undergo training provided by the franchisor. This can cover various aspects, including operations, marketing, inventory management, and customer service. Prepare to invest time and effort in learning and implementing the franchisor’s systems and processes.
Site selection and setup: If applicable, work with the franchisor to select a suitable location for your franchise. They may provide guidelines and support in finding and securing a location. Follow the franchisor’s specifications for setting up the physical space and ensure compliance with local regulations and permits.
Launch: With your franchise set up, launch your business following the franchisor’s guidelines. Execute marketing strategies, hire and train staff, and manage day-to-day operations. Adhere to the franchisor’s brand standards and operational procedures to maintain consistency and benefit from the established brand recognition.
Other Considerations Regarding How to Become a Franchise Owner
Each franchise system may have specific requirements and processes, so it is important to follow the franchisor’s guidelines. Bear in mind, franchisors are looking for franchisees that share their passion for the brand. If you’re not the right fit, trust the process. You’d hate to be committed to a business that doesn’t work for all parties. Franchisors want folks who are excited about their opportunity and are willing to work within the parameters of their model to grow their franchise and the brand.
How to Become a Franchise Owner with Wild Birds Unlimited
Wild Birds Unlimited has been helping bring people and nature together for over 40 years. In that time, we’ve grown a successful brand with 350 locations. We understand that deciding how to choose a franchise that’s suited for you can be a challenging but exciting process; that’s why our franchise development team is ready to answer all your questions.
If you’re ready to hear more, take the next step to come fly with us. Fill out our information form by clicking the red button at the top of this page. We will be in touch and eager to get the conversation started about joining our flock.