A Complete Guide: How to Buy a Franchise
Around 26,000 new franchise locations opened globally in 2021. The franchise option could be more cost-effective and easier than starting fresh if you have considered owning your own business. But, like any other business, much research and effort go into buying your first franchise location.
Read on if you’re keen to join thousands of entrepreneurs launching franchises in the coming year. We’ll show you how to buy a franchise and provide you with additional information to set you on the path to success.
Choose Your Franchise
There are countless franchise opportunities available, but not all will be the right fit for you. The best idea is to choose a franchise in the industry you have the most experience. Having some working knowledge of how that type of business operates will give you a better chance of success.
For example, owning a Rib & Chop House might be an excellent option for someone with restaurant experience or even more specifically in the steakhouse industry. Once you choose your franchise, it is time to take the next steps towards buying a franchise.
Although owning a franchise is generally more cost-effective than starting your own business from the ground up, there are still significant upfront fees. These fees include more than just startup costs. You also need to account for the ongoing franchise fees, real estate fees, and the costs of royalties, materials, and utilities.
There are a few different options you can look into for financing your franchise. These include:
- Small Business Association (SBA) loans
- Equipment Financing
- Traditional business loans
- A business line of credit
Find a Location
One of the most important things you’ll do when learning to buy a franchise is picking the perfect location. You must find a place where your specific type of business will thrive and attract plenty of the right staff and customers. At Rib & Chop House, our patrons and staff are the root of our success. Engage with the community when choosing your franchise location, so you’ll have potential employees or satisfied customers to support you.
When choosing a location, start by finding a building with the proper setup and ample space for your chosen franchise. When visiting the location, ask yourself how the clientele will get there. How busy is the location, and does it have convenient access to public transportation?
Also, check the parking situation. Is there a dedicated lot or plenty of on-street parking options nearby? These questions are important because very few businesses can survive in areas that don’t already have some type of visiting audience.
Another thing to look at is your surroundings. Locations in or near outdoor shopping centers are often a great choice if the other businesses are likely to attract your ideal customer. For example, a restaurant will likely do well in any area where people are shopping because customers might want food after they’re finished shopping.
Review Your Franchise Agreement
The franchise agreement is your formal contract detailing the rules of how that franchise operates. You should review this document very carefully and pay special attention to the following:
- The fees you’ll be expected to pay
- How you’ll be allowed to use the franchise’s brand (including name, logo, etc.)
- What your obligations are to the franchise
- What the franchise is promising you in return (bonuses, profit percentages, financial assistance, etc.)
If you have any questions, you should ask them before signing your franchise agreement. Once you sign this document, you’re legally bound to uphold your end of the deal. Getting a lawyer to review the contract before signing is always a good idea.
Attend Corporate Training
Most franchises provide some level of corporate training for new owners. During this training, you should learn more about the company and how the organization operates. Since you’ll own part of an established business name, there will be rules regarding how you can or can’t run your location.
Some franchises still use in-person corporate training. However, many have switched to virtual training since it’s more convenient and allows new franchise owners to complete it in their own time. When opening a franchise at Rib & Chop House, we go through three phases of training with our franchise owners. During your initial training, you’ll be provided with study materials to get you started on your journey towards franchise ownership. Then, we will officially begin with training with the first phase, location start-up guidance where together we’ll find the perfect place for your Rib & Chop House. Next, we will begin six weeks of initial training with investment partners and other managers you’ll be working with. Finally, we will complete onsite training as the franchise development team will join you at your location for up to three weeks for your grand opening!
Prepare for Opening
Once you’ve completed all the steps above, you can finally prepare your franchise location for opening. This is the most exciting part of the process, and depending on what company you go with, you may have ongoing mentorship through the opening.
Your franchise mentor may sometimes continue helping you for days, weeks, or even months.
Additional Things to Know About How to Buy a Franchise
Knowing how to buy a franchise is essential to becoming a business owner. However, knowing whether this is the right step for you is crucial.
Below is a concise listing of the benefits and downsides of owning a franchise to help you make the best choice.
As a franchise business owner, you’ll reap many benefits compared to independent restaurant owners. The first notable benefit of owning a franchise is you already have a successful business model already established. Initiating and developing a business model takes time and money, so with a successful one already instituted, you are already ahead of the game. Along with an established business model is also an already existing customer base, which means you won’t have to grow your clientele from scratch. An already existing customer base will only help your franchise be more successful.
Furthermore, as a franchise owner, you will get support and training every step of the way from your franchisor. Having someone to guide you through owning and operating your franchise is invaluable. Moreover, owning a franchise has the added advantage of being more cost-efficient in the long run, which may seal the deal for you from the start.
Ready to Jumpstart Your Franchise?
Are you ready to become a business owner now that you’ve learned how to buy a franchise? Fill out our online form or call us today at (406) 551-4982 to talk about whether a restaurant franchise opportunity is right for you. By clicking the button below, you can contact a member of our team, and they will be happy to answer any questions you may have!