The Franchise Buying Process
HOW LONG DOES IT TAKE TO BUY A FRANCHISE?
If you’re new to franchising, you may be wondering how long it takes to buy a franchise from a time perspective.
The actual time will depend on a number of factors to include the following:
- How motivated you are to buy a franchise?
- How methodical are you in your due diligence process?
- Do you have the financial resources readily available to buy a franchise?
- How much time do you have available to spend on the due diligence process?
- Do you have a spouse or partners involved in the process?
STEP 1 – EDUCATING YOURSELF
The majority of people that investigate franchising are doing so for the first time. It’s essential that you take the time to learn about franchising and understand all that is involved. I educate my clients about franchising and have several PDF documents that will give you what you need to know as you move forward. I also recommend The Franchise MBA by Nick Neonakis, which is an Amazon Best Seller and a great book for those just starting their franchising investigations. Click here to get your FREE copy.
STEP 2 – EXPLORING FRANCHISE OPTIONS
There are over 3,500 active franchises in the United States, and it is almost impossible for you to be able to tell what franchise options could be the best fit for you. As a professional franchise consultant (matchmaker), I utilize an effective process for helping people identify those franchises that could be the “right” fit. I have outlined my process on the consulting page of this website and also welcome you to download my Client Guide to Using a Franchise Consultant. It will provide you with a detailed overview of how I help people determine which franchise options may be best suited to help them achieve their lifestyle and financial goals.
Franchise Fee: $60,000
Locations: 16 open / 100 sold
Franchise Fee: $30,000
Locations: 7 open / 29 sold
Franchise Fee: $49,500
Locations: 29 open / 100 sold
Franchise Fee: $49,500
Locations: 175 open / 632 sold
Franchise Fee: $45,000
Locations: 236 open
STEP 3 – SPEAKING WITH FRANCHISORS
Once you are connected with a franchise company, their first task is to make sure that you meet their requirements. Each franchise system has their own process for educating candidates about every aspect of their franchise, while they are making sure that you are a good fit for their franchise organization. Here are some of the common steps/discussions you can expect to happen over a 6 to 12 week period:
- Introduction Call
- Unit Economics / Finance
- Marketing and Operations
- Franchise Disclosure Document (FDD) Review
- Training & Support
- Territory / Real Estate / Construction
- Executive Leadership Call
- Discovery Day
- Agreement Signing
The above process can stretch out to 12-16 weeks if you aren’t responsive and actively seeking to move forward in the franchisors process. You can stop the process at any point in time if you come to the decision that a particular franchise is not for you. Even after the first call you have with a franchisor.
I provide my clients with three documents that help them at each step in the process. This information I share is vital to those who want to get everything they can out of their conversations with franchisors and franchise owners during validation calls.
STEP 4 – DECISION TIME
Soon after completing your Discovery Day with the franchisor, you will receive notice as to whether the franchisor is going to extend you the opportunity to buy a franchise license (become a franchisee) for a specific territory or multiple territories. Assuming you have made a good impression and they have invited you to be part of their franchise system, now is the time you’ll need to make your decision. By this point in time you should have all of your questions answered and have prepared yourself to move forward.
Upon your acceptance, signing of the franchise agreement, and remittance of your required fees, you will officially become a franchise owner.
WHAT HAPPENS AFTER YOU SIGN A FRANCHISE AGREEMENT?
As you would expect, franchisors all have their own process for helping you learn their business model and prepare you for launching your new business. The process is quite different between brick n mortar retail businesses that require a location and services businesses that may require an industrial space, commercial space, or perhaps home-based. You may be able to get started with a service business within 90 days (sometimes less) from the time you sign your franchise agreement. Retail franchises will require you to secure a suitable location and complete interior remodeling which typically takes 6-9 months. It takes 9 to 12 months on average to open your retail (brick n mortar) business after signing your franchise agreement. And although that may seem like a long time, it goes by quick because you will be involved in a variety of training, business set-up, pre-marketing, hiring, launch, and grand opening tasks that will need to get completed.