How to Start a Franchise Business with Little Money

Interested in small franchise business planning tips? If YES, here is a practical guide on franchise business.

Starting a Franchise Business with Little Money

A franchise business is one of the best types of business to operate. You must have heard about many franchise business like the McDonald’s, Zara and many others. Starting a franchise business has been gaining popularity since 30 years ago. Franchising a business is the best way to expand a business with less stress and time.

GUIDE: Chipotle Franchise Cost and Startup Opportunities

Franchising a business gives the franchisees the right to use the business name, logo and brand to do business and also pay an agreed sum of money either monthly or yearly depending on their agreement, but it’s mostly yearly.

Here are some common terms on franchise so that you don’t get confuse when I start explaining how you can open a franchise business.

Franchisor: A person or business that is granting the franchisee the right to use the company name, logo and products for business.

  • Franchisee: The individual who is giving the license to operate a business under the franchisor’s name and model.
  • Franchise Fee: The initial fee the franchisee pay to the franchisor.
  • Royalty Fee: This is the fee pay by the franchisee to the franchisor on a regular basis either monthly or yearly. Sometimes it is a percentage of sales, sometimes it is a flat fee.

TUTORIAL: How To Open A Forever 21 Franchise 
Franchise agreement: Just like a partnership deed, this is the franchise document having the contract which also contain the terms and conditions and responsibility of the franchisee.

Let us now move to the basis and cost of starting a franchise business


1. Know your Business Interest

Before diving fully into starting a new franchise business, you should know what business you do have interest in and will be able to fight through for the long term. You need to understand yourself. Which business have been having interest to start up? Who has done that business and succeeded from the business franchise? One thing about knowing your business interest is, if you’re very interested in a business, you will be willing to fight through the challenges till it succeeds.

MORE: Zara Franchise Business Information and Start Up Cost

2. Know the In and Out of the Business

Some entrepreneurs like starting restaurant franchise business based on assumptions and this may not help the business. For you to be able to go into franchising your business, you must know every in and out of the business. This will help you combat any challenge that may come in the future. There are several questions to ask before starting a franchise. Ask questions from successful franchisors. Do your own research. The internet can’t provide real life answers unless someone has put it there. But you can’t still rely on information from the internet because some vital information may not be written. Get fact about how a thriving franchise under your area of business operate. I bet you don’t want to regret your move.

3. Learn about the required resources and financing

Different types of franchise business have different requirements. It is very important to ask yourself if you have the required resources. Do you want to know the steps to start a franchise restaurant business? Then you must ask yourself if you have the required resources to operate that business. Gather a list of successful franchise business opportunities and study their business model to see how and why they became successful. Get good information about finance requirements to starting a franchise business, the infrastructure, property requirement, etc.

4. Know the Legal Issues involve

It is advisable for business owners looking to own a franchise business to get acquainted with the legal requirement needed to operate a good franchise business. You will be required to prepare a standard document that will contain the operation of your franchise. It is required of all companies by the Federal Trade Commission in all country. This means you will be needing an advisor on legal matters.

5. Pick your Location

Your location can determine the success of your franchise business. Choosing a good location is good for some particular kind of business. So choose your franchise business location carefully.

6. Search and Screen Franchisees

Meet with existing franchisees to learn directly from them. They are the ones to give the right information about some aspect of the business franchising. Because someone want to be a franchisee under you does not mean you welcome him or her with an open hand. You have to screen them to avoid having a bad partner who is not ready for viable franchise businesses.

Remember they are going to be representing your business and help you in promoting your brand. I know you get enthusiasm when you get entries on franchisees that want to operate under your business name. You have to know why they are into buying into your franchise business opportunity. Know about their financial background so you can tell if they have the financial backup to scale the business.

7. Sign the Franchise agreement Document

Prepare a list of important forms for franchise application. Get the necessary document signed in the present of a lawyer, one or two witnesses together with the franchisee.

MORE: White Castle Franchise: What You Need To Know

8. Support your Franchisees

This is the fastest way to grow your franchise business. Don’t just leave the business totally in the hands of the franchisees. A franchisees is more or less a partner in your business. Any assistance needed by you should be given to the franchisees. Because if the franchise business succeed, you also succeed.

Make sure you take the right step in starting up your franchise business.

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