Buying a franchise

Description of the path to buying a franchise in the form of a brief description of 25 steps to buying a franchise and the return on investment of a franchise project.
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Buying a franchise is not easy. The main difficulty for the buyer is that he absolutely does not understand what steps await him on his path. It is obvious that someone must help, someone must accompany the opening of a partner outlet. But newcomers to the franchising business definitely lack a concrete understanding.

That's why I've outlined a typical franchise buyer roadmap. I have compiled the basic 25 steps of a successful franchisee. This is the path you will most likely take if you decide to purchase a franchise.

Determine the requirements for a franchising project.

Naturally, any good project must begin with goal setting. Why do you need a franchise? Do you want to create an independent stream of profit or, for example, do you want to expand an existing business with a franchise? Naturally, your choice will depend on this. What is your background: what experience do you have? What investments are available to you? This will all affect which franchises are available to you.

Collect a list of suitable franchises

Based on your goals and data, find 5-10 franchises in your industry that seem to fit your initial criteria. This is an excessive amount, we collect it specifically so that we can easily discard the unsuitable ones but always have an alternative to choose from.

Request commercial information

Typically, franchisors at this stage send presentations and advertising brochures describing their projects. It is worth reading these materials to get general information: what investments will be required, what advantages each project has, what support each franchise offers. In addition to advertising data, you need financial data, an approximate PnL with information about what income / expenses / payback the franchise program offers.

Obtain an agreement on which the franchise is based

The main document that regulates the relationship between the franchisor and the founder of the franchise is the commercial concession agreement. Everything that the franchisor promised you at the previous stages must be included in the contract, otherwise the promises will not have real force.

Determine what benefits a specific franchise provides

From the text of the contract you will understand exactly what benefits the franchise gives you. Perhaps the technology for producing a special product, perhaps the right to use an over-promoted brand.

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Determine what benefits a specific franchise provides

From the text of the contract you will understand exactly what benefits the franchise gives you. Perhaps the technology for producing a special product, perhaps the right to use an over-promoted brand.

Calculate the project's payback

Based on financial data received from the franchisor, as well as based on your own research, you should understand the payback period for the project.

Calculate the cost of opening it yourself

The advantages of a franchise will be very clear if you plan to independently open this business in your city. It may turn out that opening such a business on your own will be more profitable and convenient.

Understand the restrictions prescribed by the contract

Any partnership involves restrictions. Determine any restrictions that the franchise requires. You may have to buy all your ingredients from a specific supplier, you may have to work on specific equipment.

Find out the history of openings and closings of network points

When meeting in person with the founder of the franchise and using Internet resources, you should determine the history of openings and closings of the network. How often do new points open, how long does a point last on average, how often do they close? This information very accurately characterizes the health of the business.

Survey existing and closed franchisees

This is an action that 99% of franchise buyers neglect. Other franchisees are people who have walked the path that lies ahead of you. Only they will be able to give you the necessary information that the founder will not share.
Sign the contract on your terms

Based on the analysis, offer your terms on which you are ready to buy a franchise. During the negotiations, come to the content of the agreement that would suit both parties.
An article with a more detailed description of working with a commercial concession agreement
Get help from a support manager

You are new to this business and you can open a franchise business only under the supervision of an experienced, responsible person. In all subsequent paragraphs, we assume that you will carry out all actions with the support of a manager.

Select a room

Typically, the selection of premises is carried out independently by the User according to the requirements of the Copyright Holder, and the Copyright Holder helps to choose from several options the one that is optimally suited for this type of business.

Find personnel

Personnel selection is usually carried out by the User independently. However, the franchisor may agree on the candidacies of key employees. If this is a catering business, then the franchisor can help with the selection of a chef and manager, and these two will select a team for themselves.

Find suppliers

Find local suppliers of everything you need to run your business. Sign contracts with all suppliers and contractors.

Carry out design

The selected premises must be designed visually and technologically. For this purpose, appropriate projects are created: design project, technological project, etc. There are different practices, sometimes the design is carried out by the Copyright Holder on its own and this is included in the cost of the franchise, sometimes these actions have to be done on its own, involving third-party contractors.
Renovate the premises

Based on the created projects, it is necessary to prepare the premises for opening. The construction team is selected by the franchisee independently at his own discretion and at his own expense

Buy equipment

A technological project requires a certain set of equipment. The user purchases a set of equipment at his own expense. It is better to do this in advance so that the equipment can be delivered on time.
Conduct staff training

In order for your team to learn how to create a franchisor’s product and provide service according to the franchisor’s standards, the team must have the appropriate set of knowledge and skills. The training must be carried out by the franchisor, providing your employees with the information necessary for the job and imparting the necessary skills.

Debug processes

Your team already knows everything they need, but it is still dangerous to open and start working on the flow. It is necessary to test the team’s skills and bring work processes to automation. When work processes are done flawlessly, doors can be opened to a wider audience. You are ready.

Hold the official opening

The promotion period largely depends on how loud the opening of your enterprise will be. The whole city, every consumer of yours should know about you, you need to make a splash and attract all advertising channels to cover your opening.
Get operational support

Unfortunately, the opening cannot be considered a happy ending for your business; there is a lot of scrupulous work ahead to achieve payback for your business. At point No. 7, together with the franchisor, we planned the payback and expected revenue, expenses and profit. Now our actions must be aimed at achieving these indicators and the franchisor must dive into our business as deeply as possible in those moments when our indicators lag behind the planned level.
Achieve ROI

And now we have recouped our investment in business. It's time to take a sip of champagne and plan the opening of a new point, returning to the first point of our memo.

Opening a second point

This step is taken by successful franchisees who were satisfied with all the previous steps and still have a desire to repeat this path.

I hope that having a clearer understanding of the process of buying a franchise and opening a franchise business will allow you to optimally plan your actions and protect yourself from possible surprises.

If you have any questions, I will be happy to answer them by email: