There is an undeniable allure to starting your own business and building your brand from scratch. There is also an undeniably high failure rate for those ventures, which is why aspiring small business owners are increasingly going the much safer route of buying a franchise instead.
Joseph Rizzuto, a Staten Island, New York-based commercial real estate developer, says becoming a franchisee offers several distinct advantages over starting a new business. Most importantly is that regardless of whether the franchise is a restaurant like McDonald’s, or a real estate company like RE/MAX or Century 21, it has a built-in brand reputation to woo customers, as well as an established support structure to aid the franchisee.
Rizzuto adds that financing is often easier to get when buying a franchise as well, given their higher success rates compared to new businesses, as well as their lower price tags in many cases.
Today, Joseph Rizzuto looks at the general process for acquiring a franchise and some of the things to watch for when doing so.
Finding a Franchisor
While the restaurant industry springs to mind when thinking of franchising, there are perfect franchises available in nearly every industry. The restaurant industry is, of course, replete with opportunities, with almost every major brand offering franchises and many of them ranking among the most popular.
Several hotel franchises also rank highly, including Marriott, Choice Hotels, and Hilton. Donut chains like Dunkin’ and Krispy Kreme, cleaning services like Chem-Dry Carpet Cleaning and Merry Maids, and real estate companies like Century 21 and Coldwell Banker are also popular options for franchisees.
Whatever industry you are interested in owning a slice of, there is likely a franchisor to meet your needs, so you certainly do not need to settle for the obvious choices in the most visible industries according to Joseph Rizzuto.
Applying to Become a Franchisee
Once you have found a franchise you are interested in buying, the next step in most cases will be to apply to become a franchisee. The forms for doing so are usually available on the company in question’s website.
If the company believes you have what it takes to become a franchisee, they will set up some calls and meetings initially, including with other franchisees, allowing you to pick the brains of those who have taken the same journey you are about to embark on. Should things go well, you will be invited to one of the company’s “discovery days,” during which several prospective franchisees are given an inside look at running one of the company’s outlets.
Making the Investment and Finding a Location
The moment of truth comes next, as you decide whether to pay the franchise fee that will launch the process of setting up your franchise in earnest.
Once that milestone step is completed, you will need to scout out potential locations for the franchise with the help of the franchisor and its team of brokers. With their extensive market data, the franchisor will be invaluable during this process, understanding well the keys to finding a successful location for one of their franchises.
Developing the Building and Hiring Staff
With a location leased and ready for development, the final step will be to erect the building itself, which typically follows a franchise-standard layout. Joseph Rizzuto notes that while this step may seem intimidating, the franchisor will again offer a great deal of support, often setting the franchisee up with contacts to handle the project’s various tasks.
Before the store’s grand opening, the final step will be to hire staff to man its checkouts or perform other duties, assuming all of that has not become automated away yet. You will also need to get the supply lines set-up, so you have a steady diet of the goods you will be selling or turning into the things you will be selling.
It is a lengthy and involved process, but with the experienced and helpful hand of the franchisor to guide you, it will not be long before you have a store to call your own. And with many franchisors eager to find franchisees capable of managing multiple locations, it could be just the first big step on a longer and more lucrative journey.
Check out Joseph Rizzuto’s article on What to Look For When Purchasing Commercial Properties.
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