Often, people who want to start a company, such as restaurant business, are motivated but don’t know what to do. Instead of starting from scratch, one option is buying a franchise as this is an excellent way to increase distribution. Also, you get the support and guidance from the parent company in exchange for royalties, which is a percentage of your sales. Are you thinking about starting a franchise business but are unsure about what’s required? Here are five of the basic requirements for starting a franchise company, along with a few considerations and warnings.
What Is a Franchise?
Maybe you’ve heard of this term but aren’t quite sure what it is. Put simply, a franchise is a business that’s owned and run by a franchisee or individual but is overseen and branded by a larger parent company or franchisor. Common examples include restaurants and hotels, such as Subway and Hilton Hotels.
1. Money for Getting Your Operation Off the Ground and Running
Before you can get your operation going, you’ll need to have enough initial capital as well as an overall net worth before even considering starting a franchise. Unless you’re independently wealthy, you may have to borrow money. Start with commercial banks since they fund many types of franchises. You could also use equity raised by other people.
2. A Business Plan
One of the main requirements for starting a franchise is a business plan, which you’ll also need to present to a lender. Before writing your plan, go over all the data you’ve been offered from a prospective franchisor, in addition to your own personal research.
Your plan should include details, such as estimated investment expenses, besides projected returns. Most importantly, be sure your business plan is well written because this can make a difference in whether a lending company approves your loan.
3. Exceptional Management Skills and Experience
For your franchise to succeed, you’ll need to possess the right skills and management experience. Therefore, be sure you have the right set of skills that meet a franchisor’s requirements before trying to buy the franchise.
4. Regulatory or Legal Requirements
A fourth requirement is satisfying any regulatory or legal requirements that the parent business mandates. While sometimes the requirements are simply obtaining permits and a lease, in other situations, it could involve educational requirements or specific licensing.
5. A Good Accountant
You’ll also need a skilled, experienced and highly qualified accountant for creating audited financial statements. Another reason for hiring an accountant is for giving you sound advice on your business’s financial structure.
Other Considerations
- How much you can earn depends on several factors. For example, as a Twin Peaks franchisee, some of these variables include your management skills, business location, market conditions, traffic, operating costs and other factors.
- Do as much research as possible to see how franchising works so that you can know your options and what to expect.
- Take advantage of seminars that can give you tips for succeeding in your franchise business.
- Consider your interpersonal skills. Are you able to comfortably interact with both employees and customers? Besides being energetic, you also need to pay close attention to details and be exceptionally disciplined.
- Another helpful trait is having a management style that’s hands-on or self-motivated.
The Bottom Line
- The process of starting a franchise business isn’t cheap or easy, so it’s important to partner with a reputable parent company.
- There are several requirements you must satisfy before starting your business.
- Franchising is one of the most flexible ways you can distribute goods and services.
- A franchisor can give you the needed training and support for starting a restaurant franchise business.
Partnering with a fun and successful brand, such as Twin Peaks, which is a unique sports bar and restaurant, is a smart move. Please contact us to learn more about the franchise process and apply today.