The Franchise Timeline
The Franchise Timeline
Susan, a bright, energetic and make believe person, has decided to become a business owner by buying a franchise. She understands that there are many steps to the process and asks me how long it will take before she will be able to open the doors to her business. Figuring she wouldn’t be satisfied if I told her that it could take anywhere from several months to a year or longer, more or less, I came up with the following timeline:
Step 1: Finding the right franchise
Susan could be out shopping and see a for sale sign in the window of a storefront franchise. If she likes the business, can meet the seller’s price, is approved by the franchisor, and gets in on a franchisee training program right away, Susan could be running her new business in a short period of time.
However, a more likely scenario is that she will spend weeks or even months doing research on a variety of franchise businesses before selecting one for purchase. Once she finds a business to investigate, Susan will have to go through a Discovery Day to meet with the franchisor in person, learn more about the business, have financing arranged, and be approved as a franchisee.
There are a lot of variables here but much depends on a person’s motivation –
how anxious they are to start a new career. Another variable would be how the search is conducted. If Susan uses a franchise broker to help her narrow down her search, the process usually takes about six weeks. If she decides to do research all on her own, it may take months or even as long year before she is confident she has found the right business.
• Average research time: Six weeks to six months
Step 2: Finding your location
The actual territory of your business will be part of your contractual agreement with the franchisor and within that territory you will probably need a physical location. The location could be in a mall or strip-mall, a warehouse in an industrial park, or a stand-alone building. Some exceptions would be home-based businesses that you could run from a home office or cart-based franchises that you would take to events like parades, carnivals, fairs, etc.
Most franchisors offer at least some help with site selection to find the most advantageous location for your business. Some even help with the lease negotiations. Specifics for build-out and furnishings are usually covered in your agreement and franchisors use their bulk purchasing power to get you reduced prices these items.
Depending on how difficult it is to find a location and the amount of work needed to get your location ready for business, this process could be lengthy. I’d tell Susan to be both prepared and patient.
• Average time for location search and build-out: Six to eighteen months
Step 3: Financing
I spoke briefly about financing but that was assuming that my friend Susan had cash in the bank ready to spend on a franchise business. The cost for opening a business covers three areas: the initial fee paid to the franchisor, the cost of preparing the business for opening, and finally the cost of running the business for that period of time until it is profitable. That includes paying your bills and your employees and also the money you need to live on.
Fortunately a prospective franchisee doesn’t need to have all that money in her pocket. Some of it can be borrowed from a bank, usually using equity in a home. Another option is taking the money from your retirement savings plan.
Often the franchisor will help you find a franchising option by connecting you with some companies that do these types of loans. However, the sooner you can get financing, the sooner you will move ahead with your new business so don’t put this item off until the last minute.
• Average time to secure financing: One to three months
Step 4: Training
Once Susan has selected her business, she will be excited and anxious to start training. Training programs can vary quite a bit from company to company. Some franchisors will do training by email and phone for a period of weeks and then bring in the new franchisees for some classroom work and hands-on training at headquarters. Other businesses need only to provide several days of classroom training.
Since Susan’s training should cover all aspects of running her new business, from operations to marketing to customer service, a training program of several weeks or more is typical. Many franchisors will offer a number of continuing training opportunities as well, and because I believe the more you know the better, I’d be sure to encourage Susan to take advantage of all the training available.
The good news for Susan, who is anxious to get started, is that a majority of the best franchisors have new franchisee training classes scheduled at least monthly so her wait to start training won’t be long. The franchisor will be just as anxious to get the new business open as the franchisee, so they will have the training process thoroughly mapped out.
The length of time for training will depend of the type of business. If the franchise provides a service, training to learn the service may require a more lengthy training time than would be required for a simple retail outlet. In a business with a more involved retail operation, a new franchisee may need to work in an existing location for a period of time to thoroughly learn the business.
• Average time for franchisee training: Two weeks to two months
Step 5: Other Issues
Depending on the type of franchise you buy, you may also need to deal with zoning or permit issues, hiring and training employees, and stocking your store. If these will apply to your business, add more time to your estimate.
I’d caution my friend Susan to use these figures as estimates only. Each situation will be unique. The most important thing I’d tell her is to be sure she has adequate financing to cover whatever delays may occur because being under-financed is considered the number one reason most franchisees fail.
The Franchise Timeline - To learn more about this author, visit Kim Ellis's Website.
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Guidelines for how long it should take to open a new franchise.
Susan, a bright, energetic and make believe person, has decided to become a business owner by buying a franchise. She understands that there are many steps to the process and asks me how long it will take before she will be able to open the doors to her business. Figuring she wouldn’t be satisfied if I told her that it could take anywhere from several months to a year or longer, more or less, I came up with the following timeline:
Step 1: Finding the right franchise
Susan could be out shopping and see a for sale sign in the window of a storefront franchise. If she likes the business, can meet the seller’s price, is approved by the franchisor, and gets in on a franchisee training program right away, Susan could be running her new business in a short period of time.
However, a more likely scenario is that she will spend weeks or even months doing research on a variety of franchise businesses before selecting one for purchase. Once she finds a business to investigate, Susan will have to go through a Discovery Day to meet with the franchisor in person, learn more about the business, have financing arranged, and be approved as a franchisee.
There are a lot of variables here but much depends on a person’s motivation –
how anxious they are to start a new career. Another variable would be how the search is conducted. If Susan uses a franchise broker to help her narrow down her search, the process usually takes about six weeks. If she decides to do research all on her own, it may take months or even as long year before she is confident she has found the right business.
• Average research time: Six weeks to six months
Step 2: Finding your location
The actual territory of your business will be part of your contractual agreement with the franchisor and within that territory you will probably need a physical location. The location could be in a mall or strip-mall, a warehouse in an industrial park, or a stand-alone building. Some exceptions would be home-based businesses that you could run from a home office or cart-based franchises that you would take to events like parades, carnivals, fairs, etc.
Most franchisors offer at least some help with site selection to find the most advantageous location for your business. Some even help with the lease negotiations. Specifics for build-out and furnishings are usually covered in your agreement and franchisors use their bulk purchasing power to get you reduced prices these items.
Depending on how difficult it is to find a location and the amount of work needed to get your location ready for business, this process could be lengthy. I’d tell Susan to be both prepared and patient.
• Average time for location search and build-out: Six to eighteen months
Step 3: Financing
I spoke briefly about financing but that was assuming that my friend Susan had cash in the bank ready to spend on a franchise business. The cost for opening a business covers three areas: the initial fee paid to the franchisor, the cost of preparing the business for opening, and finally the cost of running the business for that period of time until it is profitable. That includes paying your bills and your employees and also the money you need to live on.
Fortunately a prospective franchisee doesn’t need to have all that money in her pocket. Some of it can be borrowed from a bank, usually using equity in a home. Another option is taking the money from your retirement savings plan.
Often the franchisor will help you find a franchising option by connecting you with some companies that do these types of loans. However, the sooner you can get financing, the sooner you will move ahead with your new business so don’t put this item off until the last minute.
• Average time to secure financing: One to three months
Step 4: Training
Once Susan has selected her business, she will be excited and anxious to start training. Training programs can vary quite a bit from company to company. Some franchisors will do training by email and phone for a period of weeks and then bring in the new franchisees for some classroom work and hands-on training at headquarters. Other businesses need only to provide several days of classroom training.
Since Susan’s training should cover all aspects of running her new business, from operations to marketing to customer service, a training program of several weeks or more is typical. Many franchisors will offer a number of continuing training opportunities as well, and because I believe the more you know the better, I’d be sure to encourage Susan to take advantage of all the training available.
The good news for Susan, who is anxious to get started, is that a majority of the best franchisors have new franchisee training classes scheduled at least monthly so her wait to start training won’t be long. The franchisor will be just as anxious to get the new business open as the franchisee, so they will have the training process thoroughly mapped out.
The length of time for training will depend of the type of business. If the franchise provides a service, training to learn the service may require a more lengthy training time than would be required for a simple retail outlet. In a business with a more involved retail operation, a new franchisee may need to work in an existing location for a period of time to thoroughly learn the business.
• Average time for franchisee training: Two weeks to two months
Step 5: Other Issues
Depending on the type of franchise you buy, you may also need to deal with zoning or permit issues, hiring and training employees, and stocking your store. If these will apply to your business, add more time to your estimate.
I’d caution my friend Susan to use these figures as estimates only. Each situation will be unique. The most important thing I’d tell her is to be sure she has adequate financing to cover whatever delays may occur because being under-financed is considered the number one reason most franchisees fail.
The Franchise Timeline - To learn more about this author, visit Kim Ellis's Website.
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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Anne BarrAnne Barr has over 26 years experience in sales and marketing, six years as a franchisee. She has assisted over 367 business owners and purchasers to achieve their goals in career change, transition and exit strategy. She holds the designation of Certified Franchise Executive from the International Franchise Association, Certified Business Intermediary from the International Business Brokers Association and Board Certified Broker from the Texas Association of Business Brokers. Anne is active in professional organizations, networking groups and volunteers for non-profit entities. As owner/operator of four successful businesses, Anne has proven people skills and enjoys helping clients find the right "fit" in business ownership. Visit www.FranchiseOpportunitySpecialist.com for more information about me and my company. - Visit Anne Barr's Website |
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Jay Kubassek(Jay's Full Bio: EvanCarmichael.com/jaykubassek) In five years, Canadian-born entrepreneur Jay Kubassek went from selling mufflers at a Midas franchise to revolutionizing Internet marketing with the 2004 launch of CarbonCopyPRO, a online marketing education company, now worth over $20 million with customers in over 160 countries.
As an independent film producer, his upstart film fund Aliquot Films is currently producing a films with Spike Lee and Abel Fererra (starring Ethan Hawke and Dennis Hopper.)
Jay's entrepreneurial spirit is irrepressible. He’s the owner of five companies, a professional speaker and trainer, international real estate developer/investor, extreme sport enthusiast and emerging philanthropist. Jay resides in NYC with his wife Jamie, son Milo and dog Cooper. Visit Jay's official website: www.JayKubassek.com - Visit Jay Kubassek's Website |
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