To start a franchise once you’ve chosen one, you’ll move through six stages: sign the agreement, lock in your financing, set up your location or home base, complete the franchisor’s training, build your team if the model needs one, and open with the system behind you.
The launch phase is the most demanding stretch regardless of model. However, you can control many influences, and knowing what each stage asks of you before you get there is where that starts.
If you’re still deciding whether franchising is right for you, or which franchise fits, start with how to become a franchise owner and how to open a franchise. This post picks up after you’ve said yes.
1. Sign the agreement with your eyes open
The franchise agreement is the contract you’ll operate under for its full term. Item 17 of the Franchise Disclosure Document summarizes the big pieces: renewal, termination, transfer, and how disputes get resolved. Read Items 12 and 15 closely, too. Item 12 tells you what territory rights you’re getting. Item 15 tells you whether the franchisor requires you to personally take part in running the business.
The standard agreement comes attached to the FDD, and the rules give you time to read it. You have to receive the FDD at least 14 calendar days before you sign a binding agreement or pay the franchisor anything. If the franchisor materially changes the agreement’s terms on its own after that, you get the revised version at least 7 calendar days before you sign it.
Plenty of candidates have an accountant or a franchise attorney they trust look at the agreement. That’s a personal call, and there’s nothing wrong with it. Just don’t let a document review stand in for talking to owners. They’re the ones who can tell you what those terms feel like in practice.
My rule is at least three owners before you rule out a brand and at least five before you say yes. By signing day, nothing in the agreement should surprise you.
2. Line up your financing early
Financing shouldn’t wait until after you sign. Once you know the total investment from Item 7 and the franchisor’s liquid capital minimum, you can get specific about what comes from your own cash and what comes from an SBA loan, franchisor financing, retirement funds, or home equity. I break those down in franchise financing options.
Budget for building the business, not just opening it. Marketing to fill the calendar, a second vehicle, your first hire. When you make your validation calls, ask owners what their second year cost them.
3. Set up where you’ll work
What this stage looks like depends on the model you chose.
If the franchise needs a storefront, expect site selection, a lease, and a buildout. Item 11 of the FDD tells you what site selection help the franchisor provides. Find out who has final say on the location, and read the lease as carefully as the franchise agreement. When you have to seek property, negotiate a lease, and produce a buildout, you’re often delaying your opening by more than a year.
Home-based, mobile, and many service-based franchises skip most of that. No lease, no buildout, and fewer steps between signing and your first customer. The payoff is more immediate gratification.
Item 11 also has to disclose the typical length of time between signing and opening. Treat that as a starting point, then ask owners who opened recently how long theirs actually took.
4. Treat training like the asset it is
Buying down the learning curve is one of the main reasons to franchise in the first place, and training is where it starts. Item 11 lays out the franchisor’s training program, including where it happens and how long it runs.
Go in ready to learn, even if you’ve run a business before. Every system has its own way of doing things, and the details are the point.
5. Build your team, if the model calls for one
Some franchises start owner-operated and add staff over time. Others need a team before the doors open. Every business starts with one and grows. The labor model is one of the most important things to understand up front, because it shapes your hours, your costs, and how fast you can grow.
If you’re planning a semi-active model, where a manager runs daily operations, know this going in. Sometimes folks believe the franchise is going to run on its own. It never happens. Someone has to pay attention to it. It doesn’t have to be you. Even the most manager-run models need real attention in the beginning from someone vested in the outcome.
6. Open, then stay plugged in
Ask the franchisor exactly what support comes with your launch. Ask owners who opened recently what they’d do differently. Their answers are the closest thing to a preview you’ll get.
After you open, the system only works if you use it. Franchising is behavior driven. The question that matters most is whether you’re ready, willing, and able to do what the successful people in this system are doing. Stay close to the franchisor’s support and to the owners already producing the results you want.
Be realistic about the timeline, too. It takes time, money, and energy to build these things, even in a franchise. If you want hay five years down the road, you should have started yesterday. You can’t start when you need the hay.
Where I fit
Most of my work happens before this point. I walk candidates through the whole path, from the first conversation about what you actually want, through the research, the FDD, and the validation calls, until you reach a decision. Whichever decision that is. By the time you’re starting, you should know exactly what you signed up for.
I’m an independent franchise consultant, and I work with candidates nationwide. I’m paid by the franchisor when a placement is made, and I’m paid the same regardless of your investment. Your net expense to work with me is zero. You never pay me a dime.
Where to start
Finding a franchise is easy. Finding the right one for you is not.
If you want to see which types of franchises fit your goals and the life you’re trying to build, take the quiz. It’s a few minutes, and it gets us to a real conversation faster than anything else.
Rather talk it through first? Reach out through the contact form and we’ll set up a free 15-minute consultation. I’ll talk to anybody anywhere about franchising.
Matt Stevens Independent Franchise Consultant, The Franchise Guy
Nearly 40 Years in Franchising | 4 Businesses Owned | Nearly 1,000 Franchisees Placed | heisthefranchiseguy.com
Matt Stevens has spent nearly 40 years in franchising. He’s helped more than 3,000 people explore franchise ownership and placed nearly 1,000 of them as franchisees across more than 40 states. He has owned four businesses and served as Vice President and Partner in a $2 billion international franchise holding company. He works as an independent franchise consultant based in Dublin, Ohio, and his consulting is free to the candidate. Learn more about Matt
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Frequently Asked Questions
You sign the franchise agreement, lock in financing, set up your location or home base, complete the franchisor’s training, hire a team if the model needs one, and open with the franchisor’s launch support. Financing and validation calls should start before you sign, so nothing in the agreement or the budget surprises you.
It depends mostly on the model. Home-based, mobile, and many service-based franchises skip real estate and reach customers sooner. When you have to seek property, negotiate a lease, and produce a buildout, that alone often delays an opening by more than a year. Item 11 of the FDD discloses the typical time to open, and recent owners can tell you what really happened.
You must receive the Franchise Disclosure Document at least 14 calendar days before you sign a binding agreement or pay the franchisor, and the standard franchise agreement comes attached to it. If the franchisor materially changes the agreement’s terms on its own, you must get the revised agreement at least 7 calendar days before you sign it. Some states add their own requirements.
It’s your call. Some candidates have a franchise attorney they trust review it, and there’s nothing wrong with that. Just don’t let a document review replace conversations with owners. They’re the ones who can tell you what the terms mean in practice.
It depends. Plenty of people start a franchise while keeping their full-time job, career, or other businesses, then transition out once the franchise can support them. Few business models are designed to succeed with a primary operator who is limiting their success efforts, so if the primary driver of success ISN’T YOU, then make sure the primary driver of success is committed to mutually-desired outcomes, and has the ability to execute toward shared goals. The launch phase usually demands more of your time, regardless.
It varies by system. Item 11 of the Franchise Disclosure Document describes the training program, including where it takes place and how long it runs. Go in ready to learn the system’s way of doing things, even if you’ve owned a business before.
It depends. Some franchises start owner-operated and add staff as the business grows, while others need a team before opening. Every business starts with one person and grows. The labor model is one of the most important things to evaluate before you sign, because it shapes your hours, costs, and growth. At the same time, use common sense in considering how others’ limitations might dictate your own ceiling.
Not with me. I’m paid by the franchisor when a placement is made, and I’m paid the same regardless of your investment. Your net expense is zero, and you never pay me a dime.
Ready to Find the Right Franchise for You?
Matt Stevens | The Franchise Guy | Dublin, OH 43016
Call: (614) 595-3726
