How to start a franchise

Complete guide to start a franchise



When we look around the globe, maximum entrepreneurs want to get started with a franchise format business. In a franchise business, franchisees are well aware about the brand they are going to work under, and are aware about standard ways of operating systems. With franchise business a franchisee enjoys many benefits like pre existing base, loyal customers, renounced brand, tested model and so on. There are many different types of investments like costs and ongoing fees before setting up a franchise. This article will help you in understanding the ways of starting a franchise. 


Franchise Business


When we talk about franchise business it’s simply a business, running on mutual understandings and agreements between a franchisor and a franchisee. You can see many locations of the same brand running in different parts of cities and countries, these locations are franchised units of a brand. Franchisees need to settle fees with the brand or company In order to get a license. 


Franchise Requirements


  • Depending on license, franchise fee can range between $20,000 to $50,000. 


  • For a service-based business, a franchisee should have a minimum liquid capital of $50,000 to $60,000.


  • For a facilities-based business, a franchisee should have a minimum liquid capital of  $75,000 to $100,000. 


  • Royalty fee of a franchise ranges between 4% to 12%. 


  • There are many franchise additional expenses that need to be kept in view in order to start a franchise. 

Process to start a franchise 


Once you decide to join a franchise form, you need to make a franchise plan and then process it in order to start a franchise. Below mentioned are some steps which will give you an outlook regarding how to start a franchise. 


Pros & Cons

Before starting a franchise it’s very important to know about the advantages and disadvantages of franchise, and what kind of franchise to start with. Start a franchise which has a proven track record in the market and a franchise with a built in support structure like business management, model, training, marketing and advertising. 


Franchise that fits

Start a franchise that is a perfect fit for you, a franchise that fits your personality and that will suit your skills and goals. You can start a franchise on the basis of your strength and weakness, depending upon the industry you like to operate in, and how a franchise can achieve your goals. 



With the help of franchise research one can know how to start a franchise. There are many online platforms where interested investors can find franchise opportunities but before jumping one must evaluate these opportunities on the basis of different franchise requirements. 


While starting a franchise, investors need to keep in view following requirements before setting up 


  • Initial Franchise Fee 
  • Initial Investment 
  • Net Worth Requirement 
  • Cash Requirement 
  • Royalty Fee 
  • Ad Royalty Fee 
  • Total Revenue
  • Total Income 
  • Term of Agreement 
  • Is franchise term renewable?




First evaluate franchise opportunities only then start your location in that area. You need to make sure that no such location is operating in the area where you are going to operate because this will affect your business in many ways. So evaluating opportunities is very important in order to minimize the risk of failure. Every investor wants to outperform the rest, so evaluating opportunities is the best step before starting a franchise. In order to start a franchise make sure about these mentioned points


  • Online or in-person business?
  • Your interested industry.
  • Cost consideration. 
  • Make list of franchise opportunities and start comparing them. 




Cost evaluation is necessary when it comes to franchising, as you need to have a good understanding of costs and you should be holding top position in many different costs. Investors should be aware of royalty fees that must be paid yearly to a franchisor and other amount ranges for franchising.


Franchisees need to have a deep understanding of many different expenditure types ranging from low to high amounts like travelling, training, taxes, and initial fees to start a franchise.


Travel Expenditure: Some companies invite investors to attend discover day at their headquarters in order to get deeper understanding of the brand. This whole process needs travel costs so you need to research travel costs. 


Training Expenditure: as we know franchisor’s provide On-The-Job training and Classroom training on a weekly basis, this process cost money, so investors should keep training costs in view while starting a franchise. 


Taxes: there are many types of guidelines in a country regarding business operation, so some areas can charge fees and taxes to start a business. 


Initial fee: initial fee ranges from $500 to $50,000 and this one-time fee is required in starting a franchise. 

Drafting Business Plan


 Drafting a best business plan is the most important aspect, write a formal business plan and let the franchisor know why you are the best and a strong candidate to own a franchise. Sit down and outline your credibility and convince franchisor’s why you are the best candidate and fit for the franchise. 


Also you need to add in the plan how much you are aware about the franchise where you want to serve, explain how much you understand the business and how expert you are in serving, and every quality that will be beneficial for the franchise. 


Franchise License Agreement


It’s important to get a franchise license agreement from the franchisor in order to start a franchise. Franchisor provides license to the franchisee to use its trademark, products and services but before signing agreement, investors need to understand the business standards. If the business standards are matching your profile then you can start a franchise, also you need to make sure that your skills are matching with the business standards and you are comfortable with its franchise. 


Choose location

Once you are done with the business operations, now it’s time to choose your business space. Whether you are interested in a restaurant or franchise the franchisor will provide you with every kind of support to keep your business space in line with respect to the brand. You will receive guidelines regarding space and size according to business setup. Choosing a perfect location is a required step to start a franchise. 


Hiring employees

A franchise demands workers before starting a business, so the investors after settling down agreement procedure and location should provide job opportunities. Already set up job descriptions and titles help franchisees to get better working staff and good employees. Hiring good employees can provide you a better business base so hire a professional team to start a franchise. 




How to start a franchise is a very important question when it comes to franchising. Different franchisor’s are providing different types of opportunities for the growth of business but an entrepreneur should always focus on the ways of starting a franchise before jumping into the market. When you will know about the ways of starting a franchise you can easily grow successfully and can generate more income with your franchise.

Frequently Asked Questions(FAQ's)

Franchise fee can range between $20,000 to $50,000 in order to start a franchise.

Yes, a franchise licence is important to start a franchise.

After business operation, choosing your business space is the next best step for starting a franchise.

Formal business plans need to be drafted in order to get a franchise.

Royalty fees must be paid yearly to a franchisor.

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