Starting a Franchise Business? Here is What You Need To Know

If a product or service is popular, and your business investment is easy to pay off, you should think about expanding your territory of influence. You can quickly capture new local and foreign markets if you create your own franchise.

A franchise can also be a way to start a business without experience. If you have a budget and desire, you can choose a project that suits you and start your own franchise business. We’ll tell you where to start.

Type of franchise

First, decide on the type of franchise you plan to engage in manufacturing, services, catering, auto business, and so on. Franchises of educational centres, sports clubs, and real estate companies have recently gained popularity. There is also a division of franchises for men and women. For example, doing a car service will be more convenient for a man, and a make-up school for a woman. But this division is not critical.

Market analysis

The decision to open a franchise in your city requires a thorough market analysis. What projects are missing in your city? In what areas of business is there a significant gap? What is there a certain demand for, and what is the lack of supply? Who is your target audience? Does your potential project meet the needs of the people in your region? Answering these questions will help you narrow down your options.

Communicating with franchisors

Having narrowed down the choice to a few franchise options from areas that you understand, go directly to communicating with franchisors and other franchisees. A company that values its reputation will not leave any pitfalls for a potential business partner, but, on the contrary, will help him deal with all the nuances. After all, the expansion of your company, first of all, is in the interests of the franchisor. You should not be content only with the negative experience of other franchisees. Practice shows that there are no absolutely successful franchises, and at the stage of establishing a business, each of them faced difficulties. Your task is to predict how this project will show itself in your region, and at the same time not to repeat other people’s mistakes.

Franchise opening plan

Organising a business requires a proper business plan. The franchisors allow you to significantly save on brand development, promotion and advertising campaign in general, but they do not offer all this for free. Several options are possible here.

Lump-sum payment. The amount of the down payment varies from company to company, and in exceptional cases, it can be very high. But this is the price for a big name.

Monthly royalties. For the opportunity to work under the brand name, the franchisee is paid with a percentage of sales. It is possible that with high monthly royalties, the franchisor may exempt from paying a one-time down payment. The opposite also happens, but less often.

Exceptional case. In very rare cases, the franchisor can act as an investor for the parent project. Such an agreement will release the franchisee from standard royalties for a certain period.

Preparation of contract

A franchise is not only doing business under a well-promoted brand but also following the rules for its use. The conditions for opening a franchise must be spelled out in the contract. For the sake of the brand’s reputation, the owner will require you to strictly adhere to the clauses of the contract. Please check them in advance to avoid fines and franchise withdrawals.


Do not estimate the cost of a franchise by a flat fee alone. Often a low down payment requires active participation in design, expensive documentation or paid training for staff. Not every aspiring entrepreneur can afford these costs at the start.


The franchise does not imply an indefinite duration. It is possible that after the expiration of the period you will have to pay again for the use of the brand or leave the project. Such conditions should be negotiated in advance.


The most common penalty for using franchises is for unilateral withdrawal from the contract. The reverse is the same: the owner has the right to take you out of business for non-compliance with the brand policy. The procedure and amount of the accrual of penalties should be spelled out in the contract.

Also, the franchise agreement must include clauses on the participation and support of the franchisor, copyright, geography of legal force and personal space of the franchisee. The more detailed and complete the agreement is, the more transparent and easier your participation in it will be.

Don’t neglect using help from professionals, as experienced property solicitors will make sure that everything goes well with the transfer of land during the conveyancing process as a consequence of your purchase.


It will be easier to open a franchise if you prepare carefully. Weigh the pros and cons, and then you can start with the steps you read above. Good luck!

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