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Opening a franchise is a perfect option for entrepreneurs who want to run their own business but do not want to start from scratch. There are over 750 000 franchises in the United States alone. Consequently, one might think that this business model is easy to deal with.
After all, the marketing strategies, pricing, and business models have already been tested by many. If you want proof of that statement, check the information about KTU Franchise’s business models. Additionally, the potential clients seem to be there already, just waiting for you to open another Dunkin’ Donuts or 7-Eleven in their neighborhood.
However, opening a successful and well-prospering franchise takes much more than securing an attractive location, finding a trendy brand name, and putting the money on the table. You have to make sure that you understand the dynamically changing market conditions, read every fine print in your franchise disclosure document, and hire a business consultant.
Nevertheless, you can open your own franchise without any experience, that is for sure. But keep in mind that you will have to sit down and plan things out in great detail, just like in any business. To help you with that, we made a list of things you need to familiarize yourself with before opening a franchise. Check it out!
How Much Money Do You Need?
How much money will it take? This is the first question that you should ask yourself. Ensure that you carefully break down inventory and purchase costs and determine the estimated initial investment you will need to make. If you do not do that, the costs might end up being much higher than you expected.
The worst thing that can happen is going bankrupt, so carefully calculate how much money you will have to spend beforehand. Once you have a clear view of your finances, you will have full control of your business and will be able to implement new ideas with ease.
How Much Time Will It Take?
Many business owners and entrepreneurs spend way too much time at work than regular workers. After signing all the franchise agreements, you might have to work for up to 16 hours per day.
Nevertheless, running your own business can give you a lot of gratification and self-accomplishment. As long as you have a clear, unbiased view of how much time you will have to sacrifice and figure out how to maintain a healthy work-life balance, it would help if you ended up feeling really satisfied.
What About the Territory?
A franchise territory is an area where a franchise establishment is authorized to open and operate a franchised business. The agreement will specify your territory’s size and the level of protection that your franchise can count on inside the designated territory. However, bear in mind that it may vary from one company to another.
Knowing the territory and protections granted to your new business is the first thing you should consider before making your first franchise investment. The territory should be specified in detail in your franchise agreement.
Even though the information about whether or not you will be granted a protected territory will be disclosed in the franchise disclosure document FDD Item 12, your franchisor is bound to specify the size, scope, and level of protection they will provide you with within your new franchise territory.
What Is a Franchise Company Right To Acquire Units?
Nearly every franchise agreement states that the franchisor has the right to acquire your assets after the deal expires. However, you should consult the terms for your business’s franchise brand acquisition to ensure that they set a fair value when it comes to your assets.
Another thing that your franchise system agreement should specify is the internal transfer provision. This term refers to a sale of a company to a business partner. It should be independent of the franchisor’s categorically stated right to purchase. The main principle states that you should not let a franchise acquire your business for less than it is worth.
Should I Hire Professional Help?
If you already have experience in contract negotiations and purchasing insurance, the chances are that you will not need to hire an accountant, a lawyer, or an insurance agent. However, if you do not want to deal with all the paperwork on your own, it would be best to hire an attorney.
This way, once you open a profitable franchise, you will protect your business from having problems with your home state laws and the franchise owners. You should also consider doing proper research on the kind of services your lawyer of choice has to offer. While hiring a business lawyer is an option, franchise-focused attorneys will provide your company with highly specialized advice.
Opening a Franchise Without Experience – What You Need To Know
Opening a franchise without experience is completely possible. In fact, it can be a great way to start running a business. However, with no experience, a future franchise-owner should consider carefully assessing their goals, expectations, and the amount of working capital necessary to kickstart their investment.
Before you buy a franchise, sit down, and create a business plan. Think about a trendy brand name and choose a proven market and a franchise model. Then, determine the costs and liabilities you will have to deal with, such as franchise fees and marketing costs.
After you do all the necessary things, carefully read the FDDs. Additionally, talking to other franchisees to learn from their experiences is always a viable option. After all, the better you understand your goal and the franchise market reality, the more likely you will become a successful business owner.
Thank you for reading!