Starting a franchise business takes a lot of the guesswork out of the initial start-up process, although this doesn’t mean the beginning is easy. So, what does the initial start-up process entail typically, and what should you expect in a franchisor and franchisee relationship?
The nice part of starting a franchise is the proven model of success, which is built into the initial franchise fee. What a franchisee is paying for is the rights to use the business model and system, and the many times the start-up equipment associated with the business. This could include large capital equipment included in the fee or an option to lease the equipment, depending on the franchise.
Essentially what a franchisee is buying is the rights, name, and business model of an already successful proven business franchise. The recognizable brand and name of a franchise takes away the difficult process of gaining brand recognition for a new business.
Part of the initial relationship between a franchisee and franchisor is a period of training, which ranges anywhere from 2 days to 12 weeks. Typically, this training is one to two weeks long, and could involve traveling to a regional location for a seminar or conference. The complexity and longevity of the training depends on the type of franchise.
The franchisor wants the franchisee to succeed, so initially they’ll help with a marketing launch campaign in some form. This could come in the form of giving the franchisee the marketing materials and training, or could be more involved until your franchise reaches a certain point of success. Ultimately, the franchisee will be responsible for marketing and being the sales person for their business after the initial campaign.
A franchisee will get all the support needed from the franchisor initially, in order to build the successful model of business to completion. After the initial support and instruction, the relationship will be more advisory, which means the franchisee needs to have the initiative and understanding to run a successful business independently.
In other words, although starting a franchise is less risky than a non-franchise, the business owner will still ultimately influence whether it’s successful or not. Having a proven system and advisory support to help make important decisions along the way is very helpful, but ultimately a franchisee is independently taking on the task of finding funding and the risk of failure.
IRH Capital is a franchiser’s preferred lender, and can help start-ups and already established franchisees get up to 100% financing for their needs. Increase your odds of getting approved for a franchise loan, and gain a partner in financing in addition to your working relationship with the franchisor you choose. To learn more about how we can help, please contact us today.