Starting your own business can be time-consuming, frustrating, and stressful. So you might ask yourself, why not open a franchise instead?
You’ll get to benefit from a business model that comes with a loyal client base and extension support — while being your own boss at the same time.
Taking on a franchise also has its share of challenges. These include high start-up costs, royalty payments, and limited creativity when running your business.
In the guide below, we’ll dig into these pros and cons, along with steps on how to start your own franchise.
How to Get Started
The first step is to find a franchise opportunity that fits your goals, personality, and skills.
With so much choice, it’s easy to get overwhelmed. Here’s what you should consider to make the right pick.
What role do you want to play? There are two types of franchise owners: people who hire staff to manage the business and operators who run the business themselves. Do you see yourself as more hands-off or having daily involvement with your business? Decide in advance which approach you prefer.
Take a look at your current financial: Your finances will play a major role when starting your franchise. Look at your month-to-month living expenses, personal debt, and any other upcoming financial obligations before you launch your business.
Consider the types of franchises available: The list of franchise types to enter are nearly endless. You'll need to consider what type of business you would work best. Some businesses make a product and offer a service with tangible results. Others are more abstract. Ask yourself what you want to see at the end of a hard day’s work.
Start Doing Research on Your Franchise
At this point, you should have a clear vision of what you're going for, including the role you’re seeking and the type of franchise to enter.
Now's the time to choose a franchise to collaborate with. Here are some things you’ll want to know to make sure you’re choosing the right franchise:
HOW MUCH WILL YOU HAVE TO INVEST?
Just like any business, you’ll need to make investments to get your business up-and-running. These include:
Franchise location: You’ll have to rent real estate to get your business off the ground. That means finding a location with high traffic and not too much competition. Franchisees will typically have to spend 5-15% of sales on rent costs.
Initial franchise fee: The franchise signup fee is the payment you’ll have to make to join the company. Get ready to anywhere from $20,000-$60,000 just to join the franchise.
Inventory and equipment: Depending on your niche, you’ll need specific materials to operate successfully. These costs vary dramatically, from $20,000-$150,000, depending on if you need to purchase costly equipment and stores of inventory to operate.
Franchises don’t typically invest their own money to market your business — that’s going to be up to you.
WHAT WILL YOUR RELATIONSHIP WITH THE FRANCHISOR LOOK LIKE?
Do some research on what to expect during your work relationship. Doing your homework in advance helps you know what you’re getting into.
Potential franchisees are often invited to a “discovery day” to find out if you’re a good match. Use the event as an opportunity to ask questions such as:
How long have they been in business?
What is the average success rate for their franchisees?
What is their average turnover rate?
How quickly are franchisees typically profitable?
Support is an essential factor to consider when partnering with any organization. Be sure to find out the type of training and other support you’ll receive as you get started and how long it lasts.
WHAT ARE THE CURRENT MARKET CONDITIONS?
Take an in-depth look at what you're up against. Is there currently a lot of competition in your area? Are there any ways you can stand out from everyone else?
Consider how the market will look in the future. How much is your city projected to grow? Are there any other franchises expected to crop up? Always be on the lookout for possible changes in the industry so you can adapt.
Review the Franchise Agreement
So you've done the research, and you’re ready to be part of the franchise. The next step is to review the franchise agreement they send you.
Reviewing the agreement is one of the most vital steps to follow. You can't afford to skim through the contract and get yourself into trouble afterward. If possible, we highly recommend that you hire a franchise attorney to review the agreement together.
Make sure to look out the following things:
Compare the promises made at discovery day and what’s written in the contract. Are there any inconsistencies?
Look at the number of existing franchisees and their turnover rate.
What type of insurance does the franchise provide?
Find out what happens if you decide not to renew the franchise after the end of the agreement.
Talk to other franchisees to get an idea of their own experience. You’ll find their contacts in the franchise disclosure document.
Get the Necessary Funding
You’re going to need funding to get your new franchise business off the ground. Here’s a list of three financial options you might consider:
Bank loan: Banks will look into your credit and franchisor's reputation before lending money. Also, you may be required to contribute at least 20-30% upfront costs.
SBA loan: The Small Business Administration can help finance your business, but not everybody will qualify. You'll have to go through an extensive process first to get selected.
ROBS (Rollover for Business Startups): ROBS allows business owners to use their retirement money to fund their business. If you choose to do this, make sure to hire a professional tax specialist to help you out.
Go Through Your Franchisor’s Training Program
Once you've signed the agreement, you'll go through training under the franchisor to learn the business trade. You’ll be learning everything about:
Site selection: The location you pick is what could make or break your business. You'll learn the best strategies for choosing a scalable area.
Local marketing: You'll gain insights on top local advertising techniques to promote your business. The franchisor will also show concrete examples that you can mimic.
Finance: You'll learn everything about how to manage your investment and growth. That includes setting up an effective billing strategy, measuring ROI, and spreading out tax payments.
Operations: You'll be up-to-date with all policies and service offerings that come with the business.
Effective training is crucial to success. You want to make sure you’re following the experts so you can avoid pitfalls and become profitable faster.
A Franchise Alternative Where You’re the Boss
Franchises give you the benefit of not going it alone if you want to start your own business, but there are a few hurdles with the signup fee, lack of ongoing support, and typically a lot more to pay back before you reach profitability.
At Main Street, we do things a little differently. Our mission is to make it simple and affordable for outstanding professionals to build outstanding businesses. We investing time, training, and capital into you and give you the tools you need to build a well-oiled and scalable business.
Each of our clients goes through our unique training method to launch their own painting business. Here’s how our model differs from franchises:
No signup fee: Franchises expect you to pay up to $60,000 to join their system. When you join Main Street, we won't charge you any fees for signup or training.
Top training: Gain access to world-class business development coaches, 500+ training modules, and online forums for continuous support.
Investment and equity: Main Street invests $10,000 as your business reaches key milestones. You’ll even have the opportunity to own a piece of Main Street by buying equity at insider rates as your business grows
Tech company culture: Main Street is a technology company that exists with the sole purpose of making the businesses in our program successful. Our team is comprised of world-class talent and bleeding-edge methodologies that put us leagues ahead of franchise company processes and practices.
How to Start a Business
When you’re looking to start a franchise, ask yourself what you want to achieve. Do you want to own a franchise or own your own brand? If your goals include profitability within a few months, the freedom to build your own brand, and support along the way, Main Street can help.
Interested in collaborating? Learn about our New Owner Program. We’d love to discuss a strategy to help you build your own million-dollar painting business.