When you open a franchise business, you become a franchisee. Some consider this the “Easy” way to start your own business, and in some ways that may be true. You do not have to go through the motions of naming and branding a fresh business. When you put up your sign, you can count on consumers to know exactly what products you offer. This typically means a faster start so you begin profiting much faster than you could profit with an unknown business name.
The journey starts with selecting the industry and brand name for your business. Some industries are far more expensive than others, with the hotel and fine dining restaurant industries leading the way in terms of start-up prices. You can expect to shell out a million dollars or more if you want to start a hotel franchise with one of the top hotel franchisors. Compare that to $20,000 or less to get into the cell phone business.
Once you know your preferred industry and decide what brand you want to franchise with, you have to get approved as a franchisee and pay the initial franchise fee. Some franchisors ask for $10,000 or less, while others can ask for $100,000 or more.
The difference is typically in the amount of support and equipment received for this fee. And, all franchises and all franchise fees are different.
Entering the franchise business means agreeing to all of the rules set out by the franchisor. These rules will vary depending on the business you are joining up with, but you can expect to set your store up in line with the image already established by the franchisor. Some franchisors require you to follow their lead all the way down to the exact uniform worn by your employees. They will certainly require you to keep up with the level of quality customers expect from the brand.
There is not a lot of individuality in the franchise business. The idea is that customers will notice few to no differences when entering stores at different locations. You benefit from using the branding and image of the business, but you have to give up creative control.
After your business is up and running, you will pay your franchisor an agreed upon portion of your profit. You have to pay close attention to these details before signing your franchise agreement. Make sure you know what you are giving up in order to enter the franchise business with your chosen franchisor. It will be incredibly difficult to get out of the agreement once you have set up shop with all of their branding and image in place.