Are you new to the world of franchising and have a thousand questions about the steps you need to take to become a franchisee? Here’s how it works.
Taking six to twelve months on average, the process leading up to the opening of a franchise is thought out in stages.
Step 1: Take the time to assess yourself
Before setting up a business of any kind, it’s important to ask yourself the right questions to take stock of your personal and professional situation, and to assess your suitability as an entrepreneur. Do I have the shoulders and skills to take on this role? Do I have a supportive family and friends? Do I have the financial stability and capacity to carry out my project? Have I understood the commitments involved in franchising? If the answer to any of these questions is no, we’d be taking an unnecessary risk.
Step 2: Choose your business sector
Franchising often enables entrepreneurs to reorient themselves and launch a brand new activity that better matches their desires and/or passions. Franchisors often prefer to train their franchisees from scratch, thus eliminating the risk of “bad” habits picked up from previous experience.
Choosing your sector of activity also means not letting yourself be dazzled by concepts that surf on fads, or that rely on legislation still under study in France or Europe. Taking the time to study the possible scenarios for this type of market is essential.
Step 3: Choosing your franchisor
Choosing a franchisor is a meticulous process, and franchising is often compared to marriage. Because, beyond the concept, franchising is all about human relations: having a good relationship and similar values with your franchisor is one of the keys to success. The same applies to the franchisee’s team, since he or she will be working alongside them on a daily basis. Talking to them on several occasions, asking as many questions as possible, but also meeting franchisees in operation, and trying immersion, if possible, are all essential to making the right choice.
Step 4: Choose your legal status
Depending on whether you’re launching your business alone or with partners, the amount of investment required, and a number of other specific criteria, you’ll need to choose between a corporate status – SARL, SA, SAS/SASU, SNC – or a sole proprietorship status – EI, EIRL. To choose the best formula for your personal situation, don’t hesitate to seek the advice of an expert (lawyer or chartered accountant, for example).
Step 5: Draw up a market study and business plan
There’s no question of going in blind: market research is essential if you want to know whether your business has a chance of becoming sustainable in a given catchment area, based on the precise characteristics of the local market. Who are your competitors and who are your customers? These are the two key questions to consider when setting up a new business.
The same goes for the business plan and financial forecasts, which, once drawn up, serve as much to convince bankers to finance the project as to help manage the future business.
Step 6: Obtain financing
Over and above the relevance of a well-thought-out project, the personal contribution required to convince the banks is estimated at around 30% of the total investment. But generally speaking, they are easier to convince for a franchise project, as the concept has already proved its worth.
In addition, some franchisors have partnerships with banking establishments, and it is also possible to use a business finance broker to bring negotiations to a successful conclusion.
Step 7: Choose your premises
Premises and location are also essential to the success of a business. The premises must correspond in every respect to the criteria provided by the franchisor, and the local market study helps to choose the ideal location.
The brand can support and advise its franchisees in the search process, and sometimes even has a department dedicated to selecting premises.
Step 8: Sign the franchise agreement
At least 20 days before signing the franchise agreement, the future franchisee receives the DIP, or pre-contractual information document, from the franchisor. Introduced by the Doubin law, this pre-contract enables you to make a commitment in full knowledge of the facts, by providing key information for the future. The list of such information is regulated by the French Commercial Code. This information concerns, in broad outline :
- The franchisor’s identity
- Brand presentation
- Network presentation
- The market
- Company results
- The main clauses of a franchise contract
This is the key moment when the candidate must clarify any remaining grey areas with the franchisor, or even negotiate certain points. Once again, it is advisable to seek expert advice to study the DIP and the contract point by point, before signing.
Step 9: Training
Passing on know-how is one of the key aspects of franchising, and one of the franchisor’s obligations. These are privileged moments of exchange during which, in addition to discovering the keys to the concept and the tools specific to the network, the franchisee forges links with the franchisor’s team But also with franchisees, especially if the network trains new franchisee promotions and makes use of practical training.
Thereafter, the project owner will benefit from support from the brand, advice from network managers and, in most cases, ongoing training sessions.
Step 10: Open your franchise
Of course, the entrepreneurial adventure doesn’t end on opening day – that’s when it all begins. Once the business is up and running, the entrepreneur can think about how to invest in the development and evolution of the network, if the franchisor allows franchisees this latitude, or consider multi-franchising, for example. It’s up to him to write his own story!
