How to be a Franchisee: The Ultimate Guide
How to be a franchisee

Maybe you’re ready to start a business but not too sure where to start, or you’ve grown up wanting to be a franchisee. Either way, joining a franchise corporation is a great way to get you started in having your own business while having a support team to help you through every step of the way.

Know Your Why

What do you immediately think of when you think of joining a franchise? Is it the UPS store or Windowmedics? Or are you still unsure of what being a franchisee means? 

Before you begin your research, construct a budget and business plan, or even contact a corporation, you must understand why you want to pursue the path of owning your franchise. Here is our guide to help you navigate the franchise journey, so you start your business off with success.

Define It For Me

To become a franchisee, it means that you will enter a contractual relationship between yourself and the existing business (franchisor). 

This agreement allows you the opportunity to distribute the franchisor’s products or services, whether it is cleaning carpets or selling cupcakes. 

Having this contractual agreement allows you as a franchisee to use their brand name, colors, and additional support in your store. Depending on the franchise, your franchise fee covers training, supplies, and marking co-op.

LLC or Corporation

When beginning the franchise, you will need to decide if you want your organization to become a corporation or a limited liability company (LLC). In most cases, franchisors prefer to work with a corporation or LLC than a sole proprietor.

The benefits of completing this step are legal, tax, and business advantages as it creates a legal barrier between your business liabilities and your assets. You can qualify for tax breaks not offered to sole proprietors, and LLC or Corporations have perceived credibility by the public.

Research, Research, And Even More Research

Owning a franchise is not for the faint of heart. It takes personal investment from your end and skills to execute the corporation’s overall brand strategy. 

When looking for franchise opportunities, start with your city or town. What needs could your new business venture fill? From restaurants, educational services to professional services, there are a wide array of 

Start With Your Passion

What do you enjoy, or what are your interests? Do you consider yourself a foodie, or do you like personal fitness? If you can decide what you want the best, locate a franchise that aligns with your core values. Picking a company that fits your lifestyle won’t feel like you’re working at all, as you are more likely to enjoy your work.

Their Mission and Values

It is crucial that the company that you partner with values the same principles that you do. On its website, a corporation should proudly display their mission and value statement.

This paragraph or sentence is a creed that the business owners and employees strive to achieve each day that they are open for business. It also gives insight into what is important to the franchisor, such as sustainability, family values, or let their customers live a better life due to their product or service. 

Check Out The Competition

It is likely that your community already has a franchise or two that are actively operating. Take time to research these companies, their brand reputation, and how they’re meeting a need of your area. Some companies to consider:

  • Chick-fil-A
  • Dream Vacations
  • Fast Signs
  • Five Guys
  • Jersey Mikes
  • McDonald’s
  • Pure Barre
  • Service Master
  • Sign Gypsies
  • The UPS Store
  • Window Medics

This list is just a sample of the thousands of different franchises that anyone can buy into by paying a large or small franchise fee.

Talk To Current Franchise Owners

Additionally, set up a meeting with the franchise owner to ask the following about their experience:

  • How they like the franchise set up
  • What are some learning they’ve had while starting a franchise
  • What is their favorite thing about owning a franchise?

Having this information about the current establishments before deciding on joining a franchise can help you navigate some of the hurdles that business owners face. Learning through others’ experiences can provide some key insights to know if you are ready to sign on as a franchisor.

Franchisee Restrictions

When joining a franchise, you are, in essence, become a part of a large community. With that, you need to remember that you are representing the brand and doing it well.

Some companies, like McDonald’s, will require that you only own one franchise and not own other companies at the same time (such as a Bojangles or a car dealership). Other companies do not mind how many franchises you own during one time period.

Location, Location, Location

Where you place your business physically is essential. There might be a specific look, square footage, and even an onsite parking requirement for some franchises before purchasing real estate.

Some companies have a real estate team that will know what works best for your business and help you with your new location, and others do not. If this is the case, ask for recommendations for the best real estate agent.  

When you are ready to look at real estate, decide how much you can invest in the property to either buy the property or lease the space. Also, research the traffic patterns and foot traffic surrounding the site during the hours that your store plans to operate.

Construction and Equipment

As you start your business, you may need help from the franchisor to hire a contractor and decide the store’s layout. The company can provide an idea of what you will need for equipment and provide suggestions for a general contractor or other needs that may arise.


As a franchisee, you create your budget, know that your labor costs might be different due to the market and the climate. You may find that the estimated hourly wage is cheaper than what your local and state laws mandate, and that will affect your budget long-term. When assembling your team, you want to find people that match the culture of the brand. Training should be available from the franchisor to help you build a strong workforce to help make your business a reality. 

Figure Out the Investment

With any business – small or part of a franchise – initial start-up costs occur to start the process. Deciding with a franchise to purchase, consider how much you are willing to invest in this venture.

This fee is a requirement that covers training, supplies, access to the brand, and ongoing support. Costs differ from one company to another, and you can find this information on each franchisor’s website. You may need to arrange some financing to secure the franchise that you want.

Consider the Costs of Being a Franchisee

With any business – small or part of a franchise – initial start-up costs occur to start the process. You may need to arrange some financing to secure the franchise you want through a Small Business Loan (SBA). Depending on the company, you may need to pay for expensive equipment or fix the building space to fit your needs. In the beginning, you’ll have to decide if you’re going to bring investors on board and take a percentage.

The Application

Be ready for some paperwork when starting your franchise journey. Completing this paperwork is not always an easy process, and be prepared that you may not get a call back once you’ve submitted your application. Be ready to spend some time on this process as it may not happen overnight and take up to one year.

Application Requirements

Individual companies have particular requirements that franchisees need to meet before being handed the keys to a franchise. These requirements may include:

  • Being a U.S. Citizen or permanent resident
  • Excellent credit score
  • Having a manager or industry experience
  • Franchisee’s net worth
  • Available Cash 
  • Any additional sources of income

Please have a friend or family member review your application before submitting it and try to connect with someone in the company to ensure that you have a recommendation.

Disclosure Agreement

Each franchise has its disclosure document, often referred to as FDD, provided to any interested parties before you sign any contracts. This document offers any potential franchisee with all the information you will need to decide whether to enter a franchisor deal. During the negotiation period, you need to learn how much control the franchisor has over franchisees regarding marketing, store appearance, and other business needs.

Prep For The Interview

Either in person, via Zoom, or a personal visit to the company’s headquarters, be ready for an interview. This time together with the organization is the perfect opportunity to discuss all the details about their specific franchise program. Ask questions on how they plan to help your business during the business’s opening but for the months and years after.

Create A Business Plan

To have an accurate idea of what you want to accomplish with your new business, you need to write it down. Not all business plans need to be lengthy but force you to put your thoughts on paper and become organized before reaching out to potential investors.

Questions To Consider

Not all franchisors have been in the business long, and you must vet them out before investing your hard-earned dollars and time into their company. Look to see how long the franchisor has been in the business.

When looking at the franchise cost, see if there are any additional ongoing costs. And once you decide to partner with this company, how long does it take before you make a profit.

Select The Right Counsel

It is best to find a legal advisor to ensure that your legal paperwork is in order. This step is necessary when your application is approved. After you receive the franchise agreement, hire a lawyer that understands the franchise industry and can guide you through the steps.

Network to Grow Your Franchise

franchisee networking guide

Once you sign on to a brand, you can not network enough. Joining the local chambers near or in your town can help you spread the word about your company to others. Creating local relationships is key to the business’s success. There may also be local merchant associations that can help you grow your business within each company through referrals. Other groups to consider:

  • Rotary
  • Kiwanis
  • CVB
  • Women In Business Networking
  • MasterMind
  • Business Networking International

These organizations and their members should be on the top of your list when working on your grand opening plan. By attending your opening day, they can spread the word at a grassroots level on why others should do business with you in the future.

Learn The Ropes

Once you’ve signed on the paperwork, you are ready to begin your franchise journey. Participate in all the training offered by the franchisor to help you learn more about the company’s customer service, products, and overall business plan. It beholds you and the company for your franchise location to do well in your area, so they want to provide as much support as possible during the start-up period. Sessions may range from the basics of business to employee management and event marketing. 

Your Grand Opening

After you have gone through the many steps of being approved for the franchise, finding the finance, getting the right location, setting up the store, and finding the right employees – it’s time to host your grand opening.

Many marketing co-ops offer pre-created materials such as digital and traditional ads, coupons, mailers, and other promotional ideas to bring people out to your location. If your franchise offers a marketing agency, work with this group to create your local store marketing plan.

Moving Forward

When you look at the different companies, look at one with a good reputation, popular in the community, which will support you as a business owner in the long-run. To be a successful franchisor, you’ll need to research, build the right council, choose the best investors, hire a strong team, and be ready to become a Jack-of-all-trades. Even if you know nothing about starting a business, there can be a strong support team if you surround yourself with the right people.

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