Starting your own business can be a complex adventure, but for many entrepreneurs, a franchise contract offers a path to independence while minimizing the risks associated with entrepreneurship.
In France, the world of franchising has seen notable growth, with a 2% increase in networks between 2020 and 2021, and a 7.7% rise in their sales. “How do I open a franchise?” This approach requires an understanding of the conditions, the steps to follow, and the financial resources required.
Explore the essential phases for opening such a chain successfully if you’re considering this entrepreneurial path.
How do I open a franchise?
Opening a franchise requires a methodical approach.
It all starts with a personal financial contribution representing around 30% of the total investment.
Next, you need to choose the ideal location, meet the franchisor, consult the Pre-contractual Information Document (DIP), sign the franchise agreement, prepare the layout of the outlet, and finally, draw up a communication plan for the target catchment area.
Why franchise?
Franchising offers the advantages of relying on a proven business concept, benefiting from initial and ongoing support from the franchisor, starting with an established customer base, making profits more quickly, delegating advertising and marketing to the established company, reducing costs through group buying power, and benefiting from a potentially lower bankruptcy rate thanks to the franchisor’s support.
How do I become a franchisee?
The first step is to gauge your interest and answer key questions about your motivations, work-life balance preferences, business management skills, and willingness to manage a team.
Next, determine the industry that interests you, taking into account your aptitudes, and talk to franchisees to gain practical perspectives.
Assessing your budget, choosing a franchise compatible with your goals, and developing a solid business plan are crucial steps.
Finding a suitable location and formally establishing your business are also important.
Finally, signing the contract with the franchisor marks the culmination of the process.
What are the requirements for opening a franchise?
Before embarking on a franchise contract, a thorough assessment of the business creator’s profile is necessary. Questions such as the reasons for the professional change, the desired sector of activity, and the financial means available must be examined in advance. The choice of business sector is essential, and franchising offers a wide variety, from ready-to-wear to food.
Signing a franchise contract
Signing a franchise agreement is an important step in the opening process.
Whether or not to go ahead with this alliance depends largely on your strategy, but it is generally advisable to conclude the contract with the franchisor before setting up your company.
This pact, drawn up with the company owning the brand, seals the terms of your contract and is often a delicate exercise, often justifying the intervention of a lawyer to ensure the balance of power between you and the franchisor.
Where flexibility is offered, notably in the choice between sole proprietorship and partnership, the number of partners required varies according to the franchisor’s policies.
Some franchises accept sole traders, while others require a corporate structure with several partners.
If you fall into the latter category, finding a partner becomes imperative to meet the franchisor’s demands.
The number of partners directly influences the corporate form of your company (SARL, EURL, SAS or SASU).
These offer asset protection by limiting the financial risk to the capital invested.
Substantial differences exist, notably in terms of flexibility, taxation and social security arrangements for managers.
For a franchise, the SARL/EURL and SAS/SASU structures are particularly suitable, offering asset protection while allowing relative agility.
The SAS may be preferable if you’re planning long-term expansion, making it easier to raise funds and add partners to support growth.
Finally, once you’ve taken these steps, you can choose your brand and contact the franchisor who matches your entrepreneurial aspirations.
How to open a franchise with no money?
Opening a franchise without money requires a careful assessment of available financial resources and financing options.
The minimum financial contribution, representing around 30% of the total investment, varies according to the franchisor’s sector of activity and the network.
Some projects may require as little as €5,000, while others may require as much as €200,000.
Evaluating equity capital, the possibility of taking out a loan, and seeking public or private financial aid are essential steps for those seeking to open a franchise without substantial initial capital.
By following these steps, entrepreneurs can maximize their chances of success in the world of franchising.
In addition to the term “franchise”, the contract can take other forms, such as brand license, concession, management contract or management lease.
These alternatives can be an interesting way of starting up a business at lower cost, or even without a down payment.
Real estate and related services, personal services and business consultancy are all areas where franchises operate with a capital outlay of less than €5,000.
Financial assistance to boost your downpayment
There are several ways to build up or strengthen your personal contribution.
– Love money: involves the financial participation of friends and family, offering tax benefits under certain conditions.
– Participatory financing: crowdfunding and crowdlending can be an interesting complement to a personal contribution.
– Prêt d’honneur: initiated by business start-up organizations, this 0% interest loan, with no deposit or guarantee, can be included in thepersonal contribution to negotiate a bank loan contract.
– Crédit solidaire de l’Adie: offers financing of up to €12,000 to support your personal investment.
– ARCE from Pôle Emploi: lump-sum assistance for jobseekers setting up or taking over a business.
A wide range of financial aids, tax breaks and support for project structuring can reduce the overall financing requirement and, consequently, the level of personal contribution needed.
