Buying a Franchise
You've found the perfect franchise biz and signed on the dotted line. Now what? Here's what to expect.
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One of the most common questions asked by prospectivefranchisees is "what will happen after I sign up for afranchise?"
More specifically, they want to know what they need to do to gettheir business open, how long it'll take to open and howthey'll know they're not missing some important task alongthe way. The answers to these types of questions are as numerousand varied as the many franchise opportunities that exist in themarketplace.
There are, however, a number of general answers that hold truefor any good franchise company. You should be able to expect thefollowing to begin very quickly after signing up:
System Documentation. Most franchisors rapidly send a newfranchisee documentation concerning their system and the tasksinvolved in getting the new business established. The franchisorwants the new franchisee's business to open quickly just asmuch as the franchisee does, and part of the secret to making thishappen is to get moving up the learning curve as fast aspossible.
The system documentation almost always involves trainingmanuals, with the normal subject emphasis being on operatingsystems, marketing and new business setup. They might also useother media to present or reinforce this information, such ascompany intranets, training videos or CDs, and even personal visitsto the new franchisee from company employees.
Critical Path Items. Franchisors, through theirexperience opening other new units, should be able to easilyidentify the critical path item or items necessary to opening unitsquickly and correctly. It might be real estate (including issuessuch as finding the location or dealing with zoning or permitissues), employee hiring (especially in franchises, which need alot of minimum wage-type employees or employees with speciallicenses), construction and fixturing of the unit (includingsourcing local general or subcontractors), or even the franchiseetraining process requirements.
The franchisor will communicate whatever factor normally takesthe longest to get done, and get to work on it immediately after anew franchisee signs on the dotted line. This is the best insuranceagainst delays later in the process of opening the newbusiness.
Checklists. Though it is certainly not a solution uniqueto franchising, new franchisees are usually provided withchecklists for virtually everything involved in the opening oftheir new business. This tried and true approach is the best methodfor avoiding costly oversights in the process.
In addition to providing basic checklists, most franchisorsprovide timing data on every checklist item, so new franchisees candouble-check to make sure they are staying on schedule. As anexample, there might be a checklist of items titled "To BeCompleted at Least Five Weeks Prior to Opening," with a newlist for each succeeding week. A progression of such schedulingchecklists assists new franchisees in establishing priorities oftheir "to do" list each week as they go through theprocess.
The question of how long it takes to get the business open isalso one that has a very large range of answers, depending on thefranchise opportunity chosen. As a general rule, the following arethe most relevant factors in determining this answer:
- Real Estate. If the franchise involves leasing alocation, the normal rule of thumb is that it takes about three tosix months (or sometimes even longer) to get the business open. Ifa location has to be built specifically for the business, plan onsix to 24 months for this to be completed.
- Training. With many franchises, it is typical for thebusiness to open within one to three months after signing up,depending on how much real world experience is involved in thetraining process.
- Financing. Though the size of the investmentdoesn't, in and of itself, necessarily result in delays inopening a business, most franchisees in larger investmentbusinesses use financing to cover part of the costs of opening.Depending on the lender and type of loan, financing can introduce adelay in opening of anywhere from six to eight weeks to as much assix months.
Though these questions usually create anxiety in a newfranchisee right after signing up for a franchise, the easiest wayto alleviate this concern is to ask questions. Make sure to coverthese questions thoroughly with the franchisor and also with theexisting franchisees during your research on the franchise. Thatway, you'll have realistic expectations when you sign up,you'll know exactly what needs to be done and you should beable to have a positive experience in opening your newbusiness.