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  • Writer's pictureGlosshouz USA

Your Complete Guide to Launching a Franchise

Step-by-step Guide to Find, Select, Launch, and Grow

Launching a franchise means launching your own business. Yes, you’ll have the guidance and support of the franchisor you select, but it will be all yours – front door to cash register to employees to back of house. That means executing an intelligent, efficient, and successful business plan with established processes is of the utmost importance.

For those seeking an established method of creating a business of your own, here is a complete guide to launching a franchise.

Research Franchise Opportunities:

While planning for (what will become) your livelihood, researching your future business will be essential. From business type and opportunities to market demand and local competition, you’ll want to figure out your options.

  • Evaluate your “right fit” by considering your interests, skills, and long-term goals. Look for franchise opportunities that align with your strengths and products or services you are passionate about. When you are passionate about your business you will have joy in the work which makes you happy.

  • Conduct research to identify industries and sectors that are growing and that have a demand for products or services. This could involve reviewing industry reports, analyzing market trends, and speaking with industry experts.

  • Once you have identified a target industry or sector, research specific franchise opportunities in that industry. Review franchisor websites, attend franchise trade shows, and (potentially) speak with franchise consultants. Determine which brands you have an affinity for and which franchisor partners you would like to work with.

  • Visit existing franchise locations to gain a better understanding of the franchise system and to observe the day-to-day operations of the business. Ask questions and speak with employees to gather feedback about the business.

Review the Franchise Disclosure Document (FDD):

When making such a big decision, it makes sense to read the fine print. You can find all of the franchise ownership details in the Franchise Disclosure Agreement (FDD). The FDD is a legal document that provides information about the franchise system, the franchise agreement, and the fees and royalties required by the franchisor.

Pay close attention to these FDD document components:

  • Franchisor Information: Review the FDD's introductory pages, which should contain information about the franchisor, including its history, management team, and financial information.

  • Litigation and Bankruptcy: Review the FDD's disclosure section, which details information about any lawsuits, bankruptcies, or other legal or financial issues involving the franchisor or its management team.

  • Initial Investment: Review the FDD's investment section, which covers the initial investment required to start the franchise location, including the store build-out costs, the initial franchise fees, inventory, equipment, and other costs.

  • System Fees and Royalties: Review the FDD's ongoing fees section, which will outline any ongoing royalties, marketing requirements, and technology fees or others that may be required by the franchisor. These fees are necessary to allow ongoing support from the franchisor. You’ll want to compare these fees among franchisors in the same industry and understand the level of support and the business systems that will be provided.

  • Site Selection and Territory: Review the FDD's site selection section, which will provide guidance on your territory protection area (so no other business of this brand will be located there). Typically, you will need to speak to the franchisor directly to determine which territories may be available near you.

  • Training and Support: Review the FDD's training and support section, which should provide details on the initial and ongoing training provided by the franchisor, as well as any ongoing business consultation and optimization support available to franchisees.

  • Advertising and Marketing: Review the FDD's advertising and marketing section, which describes the advertising and marketing programs offered by the franchisor and any requirements for local advertising.

  • Renewal and Termination: Review the FDD's renewal and termination sections, which detail the process for renewing the franchise agreement, as well as any conditions for termination or non-renewal.

  • Franchise Agreement: Review the franchise agreement, which is always included in the FDD as an exhibit. You will want to understand the terms and conditions of the agreement, as well as the franchisor's versus franchisee’s rights and responsibilities.

The FDD can be lengthy and complex, most recommend seeking the assistance of a legal or financial advisor to fully understand its terms and conditions.

Next Step in the Process: Secure Financing

Of course, nothing in business comes for free – nothing worthwhile, at least. After reviewing the FDD, you’ll have a strong sense of the financial investment required to own the franchise of your choice. The next step is establishing a financial plan to get you there.

  • Determine the amount of financing you need to open your franchise location. Consider the initial investment required by the franchisor, which should provide a good estimate for the startup costs, working capital needs, and ongoing expenses.

  • Create a comprehensive business plan that outlines your franchise location's projected revenue and expenses, your marketing plan, and your financial projections. This will be an essential tool to present to lenders. Sometimes, the franchisor can provide you with a template business plan that you can use to update with your own business information.

  • Consider your financing options such as small business loans, SBA loans, ROBS (Roll-over for Business Start-up), home equity loans, loans from family or partners, equipment financing options, and alternative financing options (like crowdfunding or angel investors).

  • Research lenders that specialize in financing franchise locations, including franchise financing companies and banks. Consider their interest rates, repayment terms, and other factors that may impact your ability to repay the loan. In many cases, the franchisor should have relationships with the lenders that know the brand and business model, and they can introduce you as needed to available lenders.

  • Gather the documentation needed to secure financing. Banks and lenders might request your business plan, personal financial statements, personal credit reports, tax returns, and other relevant documents.

  • Submit your application for financing, along with all the required documentation to the lender. Be prepared to answer any questions they may have and provide additional documentation as needed to avoid financing delays. In some instances, the lender will require that you have secured a location with a signed lease for your new franchise business location.

  • Once you have secured financing, review the loan documents carefully and sign them. Ensure that you understand the repayment terms and make all payments on time.

It's important to understand that securing financing for a franchise location can be a complex process, and it may take time to find the right financing solution for your needs. Be prepared to work with a financial advisor or other professionals to help you navigate the process and find the best financing solution for your franchise.

Choose a Location: Site Selection for Your Franchise

A good location is an essential component of a successful franchise. Select a location that meets the requirements and guidelines of the franchisor, such as minimum square footage, location demographics, and accessibility. This is another good time to consider your market research and the amount of traffic the surrounding establishments receive.

  • Conduct market research to understand your target market and its preferences. The franchisor should be able to provide you with information regarding the market and your ideal customer base.

  • Consider your business needs, such as the size of the space required, the layout, the parking availability, and the proximity to suppliers or other affinity businesses - those that may share the same customer demographics.

  • Research your competition to understand their locations, products, and services. This will help you identify gaps in the market and determine the best location for your business.

  • Consider the demographics of the area where you plan to open your business, including age, income, education level, and household size. In some franchise systems, the franchisor will provide the target demographics information from an existing successful location and also help you compare that to the demographics and population of the potential business location that you are researching. This will help you determine the ideal location for your business.

  • Check zoning and regulations to ensure that the location you choose is zoned for the type of business you plan to open. You will need to obtain permits and licenses and comply with local regulations.

  • Analyze traffic patterns and accessibility to the location. Consider the proximity to public transportation, major roads, and highways, and the availability of parking. Ensure that the location is easy to find and accessible for customers.

  • Evaluate the building and infrastructure of the location. Consider the condition of the building and understand the availability of utilities to the space. These factors may affect the timing and cost of your store buildout.

  • Determine the costs associated with the location, including rent, utilities, insurance, taxes, and other expenses. Ensure that the location is priced within your budget according to your business plan.

  • Seek the advice of professionals, such as real estate agents, attorneys, and accountants. They can help you navigate the process and ensure that you make an informed decision.

  • Design and build out the franchise location according to the franchisor's specifications. The franchisor may assist with project management, general construction, equipment purchases, and interior design.

Take the time to research, analyze, and evaluate the options available to you, and choose a location that meets your business needs and serves your customers well.

Develop Your Team: Hire and Train Staff

While your franchisor might provide guidance on timing for hiring, onboarding materials, and training assistance with hiring, getting the team up and running ultimately comes down to you, their leader!

Keep these steps in mind as you select and train your team:

  • Develop a staffing plan that outlines the roles and responsibilities for each position. Consider the staffing needs for pre-opening training, opening day, the different times of day, days of the week, and seasons. It’s very important to keep culture and personality in mind as you build out your team.

  • Create job descriptions and advertise job openings for each position to include the necessary qualifications, skills, and experience required for the role. Some franchisors can provide you with templates of this information that you can adapt to make your own.

  • Screen resumes and applications to identify candidates who meet the requirements outlined in the job description.

  • Conduct interviews with the candidates to determine their skills, experience, and cultural fit for the role. Ask your franchisor for information regarding best practices.

  • Check references to verify the candidate's experience and work history. Consider asking the references about the candidate's strengths and weaknesses, and how they would fit within the organization.

  • Make job offers to the selected candidates. Be prepared to negotiate the terms of the offer, such as salary, benefits, and start date.

  • Onboard new employees by providing an orientation that includes an introduction to the company, its culture, and policies. Provide training on the job responsibilities, expectations, and procedures. Some franchisors will have extensive onboarding systems built out for you. The training development done by the franchisor for your use will be instrumental to helping you grow the business successfully. The reputation of your business based on your team’s skills will fundamentally drive your growth so it cannot be overlooked.

  • Provide ongoing training and development to ensure that employees are up-to-date on the latest practices, technologies, and procedures. Consider providing opportunities for career advancement and skill-building along with benefits and other retention programs in order to take great care of your team.

  • Evaluate employee performance regularly and provide feedback to help employees improve their performance. Some franchisor systems will set processes for monitoring business and employee metrics to drive growth. Be sure to follow the processes that enable the company’s growth objectives.

Remember that hiring and training staff is an ongoing process. It's essential to build a strong team that shares the company's vision and culture. Take the time to evaluate candidates carefully, provide effective training and support, and continue to develop and grow the team over time.

Positioning and Marketing for Your Franchise Location

Launch your new business with a bang by promoting it through local advertising, social media, and other local channels. The franchisor may provide marketing materials and guidance to help you prepare for the big day.

  1. Develop a marketing plan that outlines the strategies and tactics you will use to promote your business. Consider your target audience, goals, and budget.

  2. Define your unique selling proposition (USP) or value proposition that sets your business apart from the competition. The franchisor’s success should be leaned upon to help you create your message to client’s clearly and effectively. Follow the sales processes and plan to execute those to grow your regular clientele.

  3. Have a website that showcases your brand and provides information about your products and services. The franchisor system should help you with this. Ensure that your location website is easy to navigate, visually appealing, and mobile-friendly.

  4. Utilize search engine optimization (SEO) techniques to improve your website's visibility and ranking on search engines like Google. This includes optimizing your website's content, meta tags, and keywords to drive local growth. Again some franchisors may help you with this.

  5. Leverage social media platforms, such as Facebook, Instagram, and Twitter, to connect with your target audience and promote your business. Create engaging content, such as videos, images, and blog posts, and use hashtags and other social media tactics to increase visibility.

  6. Utilize pay-per-click (PPC) advertising on search engines and social media platforms to drive traffic to your website and generate leads. This includes using Google Ads, Facebook Ads, and other PPC advertising tools.

  7. Implement email marketing campaigns to communicate with customers and prospects and promote your business. This includes creating a list of subscribers, designing and sending email newsletters and promotional offers, and tracking engagement and performance.

  8. Leverage local advertising methods, such as flyers, brochures, and signage, to promote your business in the local community. Consider sponsoring local events or joining local business associations.

  9. Utilize referral marketing techniques to generate new business from existing customers. This includes offering referral discounts or incentives and creating a referral program to encourage customers to spread the word about your business.

  10. Monitor and measure the results of your marketing efforts to determine their effectiveness and adjust your strategy as needed.

Remember that advertising and promoting your new business or franchise location requires expertise in a combination of strategies and tactics. The franchisor may or not help you with this depending on the system you select. Either way, you need to take the time to develop a marketing plan that aligns with your goals and budget, and continually monitor and adjust your strategy to ensure the best return on investment.

Grow Your Business: Ongoing Support and Compliance

To achieve a thriving business, it’s important to implement leadership, business monitoring, and optimization activities. The franchisor systems should support you with this. Look for ability to have weekly calls as you are getting started. As well, monthly and quarterly meetings to monitor key performance indicators and business results will be essential as you are growing business. You will want to lean on the franchisor for business consulting on new or challenging experiences you may run into. Chances are, they have seen that before and can provide guidance. Be sure you have chosen a franchisor who cares about your success and who will be available to help you. Plan to maintain ongoing compliance with the franchisor's requirements and guidelines, stay up-to-date with training and marketing materials provided by the franchisor, and communicate regularly with your franchisor to ensure ongoing support and success.

When it comes to launching a franchise, there is a lot to master, but don’t forget that one of the biggest advantages of owning a franchise is that you are not in it alone. Your franchisor should walk you through every step of the process – and beyond.

Ready to learn more about franchise ownership with Glosshouz? Get in touch for a no-commitment conversation today!


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