There is a step-by-step process to buying a franchise. But unless you’re in the franchising industry, you typically wouldn’t know!
We have created a guide to help and support you and your journey through setting up your franchise.
You Have to Find a Franchise Before You Can Buy a Franchise
Google to the rescue! You can search ‘buy a franchise,’ how to buy a franchise, or franchises for sale on your preferred search engine. And then your mind will be blown by all the stuff that comes up in that search, some of which you may find confusing.
If you know what industry you are interested in, you can narrow your search by specifying that industry in the keywords. For example, search ‘fast food franchises for sale,’ or if you know a brand that interests you, then you can search for (company name) franchises for sale.
The first thing you will see is not a specific brand but a list of portals or franchise brokerage firms. Franchise portals are websites that list every possible franchise brand you can think of. They’re handy in giving essential background information on the brand, typically the franchise fee cost, an initial investment range, and a contact number.
A Little About Franchise Brokers
A franchise broker’s job is to help you find and buy a franchise. They will have several phone calls with you to find out your interests and discuss your goals. On the call, they will confirm if you are financially qualified, do a background check, and prepare you for a connection with the franchise development team of your top three brand choices. They’ll spend as much time with you as you need, and then if you are awarded and granted a franchise, that brand you go with will pay the broker a commission.
What Does it Mean to Be Awarded a a Franchise?
Can’t you just buy a business for sale if you have the money? If it’s a typical business, yes. If it’s a franchise, the answer would be no – This is one of many significant differences between buying a franchise and buying an independently owned business. The franchisor has a lot at stake when granting rights to their brand to a buyer. It is their right to make sure the prospective franchisee is a great fit, has the right experience, and is passionate and entrepreneurial. At Dank Burrito, being awarded a franchise with us is a big deal. We have high standards and a unique brand!
Steps to Take to Protect You as a Franchise Owner
Typical franchising is regulated by the Federal Trade Commission (FTC) – This helps protect franchisees, franchise owners, and the franchisor.
Here are some of the things you would do during due diligence:
- First, talk with a franchise development representative from the brand several times.
- Receive and sign the receipt of the Franchise Disclosure Document, or FDD (this is a required document that discloses everything about the investment so you can make an informed decision)
- Confirm you are financially qualified.
- Scout some places to put your franchise that line up with the required specs.
- Discuss territory boundaries, if applicable.
- Make validation calls – this is where you call existing franchisees.
- Discovery day: Go to the company headquarters, meet their team in person, and let them tell you how they will support you with operations, training, technology, marketing, and more.
- Sign the Franchise Agreement!
- Open your business as a new franchisor!
FUN FACT: The FDD and Franchise Agreement are two documents required by the FTC. The franchisor has hired a franchise attorney to draw them up, and they must always remain compliant.
Once you have been awarded the franchise and have paid the money due, you and some team members will attend training sessions for both the business and technical sides. Then, once you’re ready, you get to launch your business with a grand opening.
We are rooting for you and your business’s success!