Buying a Franchise
You've found the perfect franchise biz and signed on the dotted line. Now what? Here's what to expect.
One of the most common questions asked by prospective franchisees is "what will happen after I sign up for a franchise?"
More specifically, they want to know what they need to do to get their business open, how long it'll take to open and how they'll know they're not missing some important task along the way. The answers to these types of questions are as numerous and varied as the many franchise opportunities that exist in the marketplace.
There are, however, a number of general answers that hold true for any good franchise company. You should be able to expect the following to begin very quickly after signing up:
System Documentation. Most franchisors rapidly send a new franchisee documentation concerning their system and the tasks involved in getting the new business established. The franchisor wants the new franchisee's business to open quickly just as much as the franchisee does, and part of the secret to making this happen is to get moving up the learning curve as fast as possible.
The system documentation almost always involves training manuals, with the normal subject emphasis being on operating systems, marketing and new business setup. They might also use other media to present or reinforce this information, such as company intranets, training videos or CDs, and even personal visits to the new franchisee from company employees.
Critical Path Items. Franchisors, through their experience opening other new units, should be able to easily identify the critical path item or items necessary to opening units quickly and correctly. It might be real estate (including issues such as finding the location or dealing with zoning or permit issues), employee hiring (especially in franchises, which need a lot of minimum wage-type employees or employees with special licenses), construction and fixturing of the unit (including sourcing local general or subcontractors), or even the franchisee training process requirements.
The franchisor will communicate whatever factor normally takes the longest to get done, and get to work on it immediately after a new franchisee signs on the dotted line. This is the best insurance against delays later in the process of opening the new business.
Checklists. Though it is certainly not a solution unique to franchising, new franchisees are usually provided with checklists for virtually everything involved in the opening of their new business. This tried and true approach is the best method for avoiding costly oversights in the process.
In addition to providing basic checklists, most franchisors provide timing data on every checklist item, so new franchisees can double-check to make sure they are staying on schedule. As an example, there might be a checklist of items titled "To Be Completed at Least Five Weeks Prior to Opening," with a new list for each succeeding week. A progression of such scheduling checklists assists new franchisees in establishing priorities of their "to do" list each week as they go through the process.
The question of how long it takes to get the business open is also one that has a very large range of answers, depending on the franchise opportunity chosen. As a general rule, the following are the most relevant factors in determining this answer:
- Real Estate. If the franchise involves leasing a location, the normal rule of thumb is that it takes about three to six months (or sometimes even longer) to get the business open. If a location has to be built specifically for the business, plan on six to 24 months for this to be completed.
- Training. With many franchises, it is typical for the business to open within one to three months after signing up, depending on how much real world experience is involved in the training process.
- Financing. Though the size of the investment doesn't, in and of itself, necessarily result in delays in opening a business, most franchisees in larger investment businesses use financing to cover part of the costs of opening. Depending on the lender and type of loan, financing can introduce a delay in opening of anywhere from six to eight weeks to as much as six months.
Though these questions usually create anxiety in a new franchisee right after signing up for a franchise, the easiest way to alleviate this concern is to ask questions. Make sure to cover these questions thoroughly with the franchisor and also with the existing franchisees during your research on the franchise. That way, you'll have realistic expectations when you sign up, you'll know exactly what needs to be done and you should be able to have a positive experience in opening your new business.