How To Start A Franchise Business in 2024 [13 Steps]

Editorial Team

How To Start A Franchise Business in 2022

A franchise business refers to a procedure of distributing products or offering services involving a franchisor. A franchisor is a company or entity that establishes a business or brand name and sells the rights to the franchisee to sell its products or goods.  A franchisee pays an initial fee to purchase the right to use the company name and must follow the rules and regulations to do business under the brand name. This franchising business provides a chance for a small business or local people to start their own business by using the business name, and these brands help and support small businesses.

Introduction Of A Franchise Business

Franchising is a famous method for business expansion and allows the brands to branch out and give opportunities to others to run the business with a small risk of failure. It is a small organization under the authorized brand or company and a business relationship or agreement between two parties. Initial training, support, and skills are needed to run a successful franchise, and the franchisor provides this service. There are two fundamental types of franchising business, product distribution franchising, and business format franchising. In a product distribution franchise, the franchisor makes the goods or products, and the franchisee sells these products, in return franchisor provides knowledge of the products, skills, and support to the franchisee along with a license. In business format franchising, the franchisor offers an entire system to handle a business along with its products, services, and trade name.

Advantages Of Open A Franchise

If you want to start a franchise business, you need to know about its benefits and advantages. This business has many benefits for small organizations and requires less experience. Franchising businesses also increase the rate of employment and prove helpful in stabilizing the economy of a country. It is a cost-effective business and has a minimum failure rate. This business also provides additional resources and support to run a successful franchise. The larger organizations also offer training and provide brands at a lower rate. People already know the brand, so it is a more profitable option and the right path to start a business. So you can build a franchise business according to your interest and investment cost.

13 Steps To Start A Franchise Business

It is very difficult to start a new business with minimum experience and fewer savings. So, a franchise business offers the chance to a new organization or a local person to start its own business with minimum cost. But before starting a business, you should make strategies or plans to avoid collapse. Here some crucial steps are considered necessary to start a business step-by-step.

1. Undertake A Research

Before starting a franchise, you should research or survey the opportunities or potential franchisors that need a franchisee to grow their business. Many companies offer a chance to open a franchise, so you should research the products and market demand of a company that you want to work with it. You should select an industry according to your interest and skills. There are a few crucial points that you should keep in your mind when you conduct a survey or choose an industry:

  • Should research the company services that it provides to its customers.
  • Should research the brand reputation and value in the market.
  • Must study the relation between the growth rate and the age of the organization system
  • Pick up one suitable option to run your business because there are many choices like travel, health, websites, and restaurant business.
  • Evaluate the start-up cost.
  • Must calculate the monthly or annual revenue.
  • Should research the competitors and current owners.

2.  Evaluate The Startup Cost

When you are going to start a franchise business, you should need to estimate the startup cost and your savings for this business. You should have enough money to pay the franchisor and not need to take a loan from a bank. Here are some cost-effective businesses and some need millions of dollars, so you should choose an option according to your savings. There are some initial expenses or costs that you should need to consider or estimate such as:

  • You should pay advance payment to the franchisor to get an authority license.
  • Estimate the cost or rent of a place that you select for your business.
  • Evaluate the travel cost because many companies invite you to their head offices and learn about their services.
  • Include the taxes that you pay to start a business.
  • Estimate the advertisement fee that is necessary to promote your business.
  • Make a fee structure to purchase equipment and tools.
  • You should need to consider the royalty fee, it is an ongoing charged fee and can pay monthly or annually as a percentage of total revenue according to the agreement.

3. Make A Business Plan

A business plan is a very necessary step after estimating the initial cost that requires to open a franchise. It is crucial to achieving long-term goals, and a business plan shows the right path to starting a franchise business. Make thinking about your business, services, and budget, and then draft a business plan. In your business plan, you should tell about your products, services, and current market demand of business. A business plan should include the following steps such as:

  • Make an executive summary to describe the services that you provide the customers.
  • Make a strategy to solve customer issues as soon as possible.
  • Register the business name because the name has an impact on every business.
  • You should make a budget for your expenditures and create financial plans.
  • Must make a marketing plan to grow a business.
  • You should make a plan to compete with opponents.
  • If you have taken a loan, then draft a plan to return it.

4. Important Equipment Needed To Open A Franchise

When you select a business option, then a need arises to purchase crucial equipment or tools according to the business structure. You should buy things within the budget and do not need to exceed it. You do not need to purchase new equipment and damage your finance plan. Here are some crucial tips for buying the equipment for a franchise:

  • Do not need to buy a new set of equipment.
  • Make a list of equipment that is needed for the franchise.
  • You should select a shop to purchase used products and repair them.
  • Before purchasing, check the condition of the equipment and evaluate the repair cost.
  • Must hire an expert repairman to repair the furniture or equipment, it also saves your time and money.
  • Only purchasing a crucial set of equipment like refrigerators, computers, and other furniture can buy over time.
  • Must buy a new computer, because technology changes every day and an old computer can create trouble.

5. Resources Required For A Franchise

There are many resources available to grow a new franchise business. International franchise association is the world’s largest and oldest platform for franchisors and franchisees. It offers many services for new business owners like training, support, education, and growth opportunities. Some essential resources are discussed here to expand business like:

  • You need to consult with a franchise consultant to understand the marketing system.
  • Working with a data analytics firm is also profitable and helps you to analyze everything from start to sale.
  • Set your legal documents by picking up the ideas of successful franchisees.
  • Must gather information about industry trends, competitors, and company strategies to increase a business.
  • Meet with experienced franchise operators and learn from their experiences.
  • Learn more about the practices in the industry, and trade shows play a crucial role in availing of this opportunity.
  • A website is necessary to get detailed information about services and prices. These resources help you to explore your franchise.

6. Consult With A Professional

Professional recommendations and reviews prove very beneficial for new business owners. Before signing an agreement must consult with an experienced franchise lawyer and consultant. A business consultant has many skills like communication, problem-solving, thinking, organization, and time management skills. They possess excellent collaborating skills with all job levels. They are very curious to know about the changing trends of the industry and provide help to others. A franchise consultant helps you, gives advice, and tells some crucial points such as:

  • Give suggestions on how to improve business performance.
  • Provides many services to clients like management, IT programs, and help in managing finance.
  • Work with other team members and teach them the basic rules and regulations of a franchise business.
  • Tell the importance of creativity.
  • Teach the staff how to work under pressure conditions.

7. Select A Business Site

Franchisors provide guidelines and help the franchisee in the site selection to gear the business. Site selection depends upon the type of business, and it can be a website, a store, or a restaurant. For an online franchising business, you need to build a website and have enough skills to operate the website and provide services to customers. An online business reduces the cost of physical location and employees. If your business needs a physical location or store, ensure the size and setup of the store. Must prefer a site near your house, it minimizes the cost of traveling, and a location around the market is also profitable because it grabs more attention from customers.

8. Franchise Licensing

 Licensing agreements allow the licensee to use a brand name or logo for a fee, and it is a less demanding and cheaper method. A license agreement does not allow you to give products to your customers according to your wish, and you also lose control over the system or services. A franchise is another licensing policy and without a license, the franchisee cannot use the brand name. Franchise licensing allows the franchisee to use its intellectual products and trademark and provide services under the franchisor system.

9. Hire A Staff

When you select an option, place, and get a license for opening a franchise now, you need to hire some staff. A staff is necessary to deliver products and solve the customers’ issues related to company products. A trained and educated staff proves helpful to make a reputation in the market. You need leadership skills to hire employees and good communication skills to interact with them. You should give the job description and information about the posts you offer and start searching the good employees. You should be able to recognize the skills and experience of the employees and give them the post that they deserve it. A franchisor also has employees for relocating the other position. So franchisor also provides trained staff to new business owners and helps them in their businesses.

10.  Training And Support

A franchisor provides initial training and support to its franchisee and increases his confidence. A confident franchisee proves more effective for growing a franchise business. So a company is responsible for making a clear training plan and ensuring full support to a new franchisee. A businessman with less work experience gets better results than a fresher. Consider the following things:

  • Before opening a franchise, the franchisee should be fully trained and ready for work under a system.
  • A new business owner should train his staff and give fundamental knowledge about company structure and products. He must train his employees to tell them how to communicate with other franchisees and entertain the customers.
  • Training is necessary to step to growing a business and meet new challenges.
  • Financial support gives the strength to overcome adverse situations and take steps for the best.

11.  Meet The Franchisor’s Team Face-To-Face

After completing all the above steps, you are very close to buying a franchise. You have already made a plan, evaluated the initial cost, and selected an option for the future. You have gathered information about the license policy of the company and drafted a summary according to the company policy. Now you have a better understanding of the business structure and know the resources which are compulsory to launch a business. Most necessarily, now you have enough confidence to start a business and can perform many services related to the work, and these services play a vital role in the success of a business. But before buying a branch, you should visit the company’s main office and meet with the leadership team. If you are satisfied with the franchisor agreement, you take the final step and pay a fee for buying a branch.

12.  Get An Insurance Policy

Franchise insurance refers to the individual insurance provided through marketing management involving a group of persons related to the purchase of insurance. Some franchisees need an insurance policy to cover the system, but some franchisors have a policy that covers all aspects of the franchisee, and the franchisees do not need an insurance policy. A new franchisee needs general liability insurance, which covers all aspects like property damage, advertising injury, and personal injury. The following are the benefits of an insurance policy:

  • An insurance policy is a crucial step for every business, it protects the company from sudden loss.
  • An insurance policy provides internal support to a franchise when it faces a loss or decline.
  • The insurance policy also offers money and financial support in adverse situations and is responsible for repairing damaged equipment.
  • Every business needs an insurance policy to recover from damage and loss.

13.  Start A New Franchise Business

If you have completed all the above steps and have hired a staff according to the demand, now you can open a new franchise. Now, you need an operation manager and development manager to complete all tasks smoothly. After signing an agreement and getting an insurance policy, you can run your business according to your desires. Signing the contract and buying a policy is the last but not least step in the business establishment. You should follow the franchise-recommended system because it is the right path for getting success. You should follow their strategies because franchisors have initial marketing steps and advertisements. Before opening a franchise, makes sure that you get all necessary agreements and policy from franchisors for operating the system.


In the Article, some crucial steps related to a franchise opening are considered. This article teaches you how to start from the ground level and what steps are necessary to start a business. You learn the importance of policies and how to work under a trained system. This article helps you in evaluating the initial cost and manage the finance. It is advantageous to work under a successful brand because it increases the chances of success and reduces loss. A franchise business has great importance and is spread worldwide. Many organizations are seeking a franchisee to branch out their business. This system gives profit to both parties and provides a chance to earn a reputation in the market. So, if you are willing to start your own business then, open a franchise is a good option for you. Firstly, you select a type according to your interest and then invest money in this project. I wish good luck to you and your franchise business.