Meta title : 5 core tips to consider before franchising Meta description : Starting a franchise business is a critical step for you entrepreneurship journey. Do it right by laying the foundation with these five steps. Keywords : franchise business, Best franchise business, How to start a franchise business 5 Tips Before Starting a Franchise Business Did you know that there was a staggering 24.3% increase in new businesses during the 2019 – 2020 period? Over 4.4 million entities came to the market. Although many people predicted the trend to stop due to the pandemic impact, it seems to have continued soaring in 2021. In January alone, the US saw over half a million new businesses penetrating the market. It is clear that more people want to become entrepreneurs moving forward. While one way of doing that is opening a startup, there is another, more tedious, but fairly profitable one – starting a franchise business. According to the International Franchise Association, over 26,000 franchises are expected to open in 2021, thereby increasing employment by 10% approximately (8.3million jobs). This points towards the increasing trend of franchise businesses in the US. The question is, how to start the best franchise business that ends up successful. This is pr ecisely what this article will help you with. It contains five crucial tips that will enable you to start a flourishing franchise business. However, in order to better comprehend our tips to start a franchise business, you need to first understand what the term ‘franchise business’ entails. What is a Franchise B usiness? In the simplest of terms, franchising or a franchise business refers to buying the goodwill of a business (let’s assume the popular fast - food chain, KFC) for a predetermined fee. The franchi see will benefit from KFC’s name, which means they will not have to worry about the footfall or marketing to attract customers. On the other hand, the franchisor (KFC in this case), will benefit from the additional (predetermined) income that the franchise e will pay on an annual basis to use the brand’s name. In short, the franchisor licenses operations for a new branch to a franchisee. Extensive training to follow and execute the franchisor’s policies is required in order to maintain the brand’s standards across its branches. Franchising requires multiple licenses, disclosures, and agreements, which can challenge businesspeople looking forward to setting up a franchise business. This is why it is always best to hire professional franchise advisors to assist you with the process. However, to make things slightly hassle - free for you, we have included five key tips you need to have before starting a franchise business. How to Start a Franchise Business? A lot of time, cost, and effort go into starting a franchi se business. There are several risk factors you need to consider, and a plethora of permits you need to acquire before you take the big step. The following tips will help you successfully penetrate the intimidating marketplace. Evaluate Your Decision The best franchise business is always the one that is established after a lot of work and devotion. Before you dive into it, you need to evaluate your purpose, and determine why you’re opting for a franchise. There are several business options for startups – y ou must have a core reason to go for franchising instead. One of the most critical factors in a franchise business is your concept. Are you willing to put in the long work hours and effort it requires? Will you be able to follow the strict set of guideline s provided by the franchisor? Is the franchise business profitable? While some franchisors allow franchisees to add a little personal touch to the business, but in most cases, room for variation does not exist. As an entrepreneur, are you willing to put yo ur creative ideas aside and follow the brand’s (franchisor’s) strategy? Do you have the capital to invest in the formation of a large franchise? If not, are you ready and willing to request funding for your newfound business idea? All of it boils down to o ne simple thing – the purpose. If you are clear about what you want to do and why, the how will come to you itself. In addition to our tips, you can also turn to reliable franchise advisors for help and assistance since they are well - vetted in helping busi nesspeople like you set up successful franchises. Make Business and Industry Forecasts The last thing you want to do is opt for a dying franchise. Franchising is not just about licenses and agreements; a major chunk of it also consists of forecasting. Look into the past annual performances of the business to gauge the trajectory and determine if the franchise is worth opting for. There are expert franchise consultants that can help you in forecasting. Furthermore, franchisees can also acquire a financial di sclosure document to analyze the financial standing of the brand. Another aspect of picking a franchise is to study the industry it operates in. Avoid an industry that is dying out, or one which is expected to face severe turmoil in the near future. For ex ample, businesspeople who may have franchised a cinema or a dine - in restaurant right before the lockdown in 2021 would have suffered significant losses from the pandemic. In an ideal situation, investing in such franchises can be an excellent measure with a decent potential for returns. To put it in a nutshell, when you are opting for a franchise, you need to do a lot of business and industry - related research to determine the sustainability of the business and the sphere it operates in. Here’s a quick sub - t ip: list down the best five businesses for franchising, and shorten it down based on thorough research and potential for success. This will help you get started with your franchise business. Invest Time, Effort, and Capital in Training The core difference between starting your own brand and franchising is that the latter demands following policies and guidelines set by the franchisor itself. In other words, when you’ve finalized the franchise business you want to get on board with, it is time to invest time , effort, and money into training. Usually, it is the job of franchisors to offer relevant training to different franchisee teams. This includes everything that trickles down from the upper management and the owner of the franchisor. You can start with the initial training to equip your workforce with the necessary skills and expertise to run the franchise. Trainings are also essential in order to maintain harmony and brand consistency between the services offered at different outlets because the end - consum ers expect a similar service at all locations a brand operates in. In other words, the best franchise business is the one that can replicate the franchise’s services to perfection. Set - Up Standards While the franchisor will govern most aspects of your busi ness, there is certain areas where you will have to set standards. One example of these areas is accounting. When you are buying the franchise, it is essential that you set up standards for your financial records. These standards must be in line with your core operational strengths as they will help you in obtaining consistency when it comes to reporting. This may not be a significant issue at start, but things are bound to get cluttered as your franchise grows, making financial reporting a hassle. It is wh y keeping a standard for financials from the very first day is important and can go a long way in defining your business’s success. Here’s a quick sub - tip for you: maintain all records in one place – preferably on the cloud – so you can access any record a t any given time, from anywhere. Do Your Costing There is no standard rate for buying a franchise. It depends upon the financial and operational stability of the brand and its goodwill. For instance, a brand like Starbucks may charge a hefty franchising fe e as compared to a local coffee shop. Your job is to evaluate the capital you have against the ROI of a franchise and determine if it will be a good investment for you. Bear in mind that the franchising fee is not the only cost you will need to pay. There is a multitude of other expenses involved in franchising, including all the licenses, equipment, and the staff you require to run the branch. Furthermore, after all these expenses, you must have enough left to bank on (at least for a few months) in case th e business finds it difficult to take off. You can always hire a professional franchise advisor to assist you with the steps involved in opening a franchise business. In Conclusion “How to start a franchise business” is a very common question among vetted and budding entrepreneurs. There is a lot that you need to look into. Hiring a reliable advisor can help you face and overcome a multitude of challenges without hassle. These consultants are equipped with all the tools and experience required to differenti ate a prolific franchising investment from an unprofitable one. However, whether you decide to start a franchise business on your own, or want to open the best franchise business with the help of an advisor, the above - mentioned list of five tips will surel y take you one step closer to your franchising goal.