How Long Does It Take to Open a Franchise?

Purchasing a franchise is one of the best ways to dive into entrepreneurship without starting a company from scratch.

However, while the process of opening a franchise is usually much more streamlined than establishing a new brand, it can still take some time if you’re unfamiliar with franchising.

Wondering how long it takes to get a franchise business up and running? You’ve come to the right place. In this guide, I’ll break down the average timeframes for each step of the franchise purchase process and provide some tips for speeding things up.

Key Takeaways

• It can take as little as three months or more than a year to open a new franchise.
• A franchising consultant can guide you through the steps, minimize setbacks, and potentially help you save money.
• Common factors that can slow down the process include long approval processes, difficulty accessing financing, and renovations.

How Long Does It Take to Open a Franchise?

It usually takes between a few months and more than a year to open a franchise, though the process can take much longer in some cases. Simple franchising industries such as home services and financial services can be set up within a couple of months, but businesses with more build-out needs, such as restaurants and fitness centers, will likely take a minimum of six months.

The exact timeline for opening a new franchise depends on factors like site selection, lease negotiations, permitting, and training requirements, all of which vary widely by industry and location.

Timeline for Purchasing a Franchise

• Research Phase (2 to 8 weeks)
• Application Phase (4 to 12 weeks)
• Preparation Phase (4 to 16 months)
• Finalizing Phase (2 to 4 weeks)
• Getting the Location Set Up (4 to 12 months)

There are many steps involved in the process of purchasing a franchise and opening your doors to customers. Let’s take a look at the amount of time you should expect each step of the venture to take.

1. Research Phase (2 to 8 weeks)

The initial research phase for new franchisees typically takes between a few weeks and a few months, largely depending on how wide a net you want to cast. Some franchisees spend months looking into various franchisors and conducting market research and territory analysis, while others already have a specific industry and territory in mind.

Even if you have specific goals, you should spend a minimum of a few weeks performing your due diligence. You’ll be placing a hefty investment in your franchise business, so it’s important to make the right decision. I also suggest approaching existing franchisees in the organization and asking questions to get some more insight into what running the franchise is like. During the research phase, you’ll determine whether or not you are ready for franchise ownership and find out if your expectations are realistic.

2. Application Phase (4 to 12 weeks)

When you’ve narrowed in on a few franchisors you’re interested in working with, your next step is to fill out a franchise application. This form helps the franchisor learn more about you, your business interests, financial status, and desired territory. You can think of it as similar to a job application. During this phase, your potential franchisor will determine if you are a good fit.

Discovery Day

If the franchisor decides you might be a good partner, you’ll generally be invited to a “discovery day”, which is essentially a “meet the team” day. Usually, you’ll be introduced to your franchisor and its executives at their headquarters, but some discovery days are held elsewhere or even online.

In most cases, these events span one or two days, and they give you the perfect opportunity to ask all of the questions you’ll inevitably have about the franchisor’s business model.

Read Through the FDD

Once your franchise application is accepted, you’ll also be provided with your franchisor’s Franchise Disclosure Document (FDD). This pre-sales document contains details about your franchisor’s business, including company background information, financial performance, past litigation, royalty fees, estimated investment costs, and your obligations as a franchisee.

You must receive an FDD from your potential franchisor at least 14 days before signing any contracts or making any payments. You can think of your time with the FDD as your dating period with the franchisor before you enter into a legally binding “marriage” (business relationship).

With that in mind, I suggest spending a minimum of two weeks combing through the fine details of the FDD. I also recommend hiring a franchise expert to help point out red flags. Get in touch with us at Franzy for a free franchise coaching consult!

Preparation Phase (4 to 16 months)

Now that you have decided which franchise to purchase, read through the FDD, and connected with the franchisor, it’s time to prepare to buy the franchise. During this phase, you’ll set up your franchise business entity, create a business plan, and secure financing to fund the venture.

Craft a Business Plan

You’ll need to allocate at least three to six weeks to craft a detailed business plan that includes startup cost estimates, sales projections, and local market analysis. How much time you’ll need depends on how much data you already have and your familiarity with developing business plans.

Your franchisor may provide a template to help streamline the process. However, I strongly recommend performing your own research rather than relying solely on data provided by your franchisor. Keep in mind that your business plan will play a crucial role in helping you secure funding, so being thorough and accurate is essential. It’s not unusual for it to take several months to craft a meticulous business plan.

Create a Business Entity

Next, you’ll need to choose a business structure and register your franchise as a business entity. This can take anywhere from a few days to several weeks, depending on your location and the type of business entity you choose. 

The process of creating a business entity includes forming an LLC or corporation (one to ten days), applying for an Employer Identification Number (EIN), and securing state and local jurisdiction licenses. You’ll also need to open a business account once you’ve received your Employer Identification Number.

Apply for Funding

Unless you have access to a large amount of personal unencumbered funds, you’ll likely need to take on debt via financing to open a franchise. Luckily, there are many different ways to fund a franchise, and securing funding tends to be easier than doing so with other business structures.

The most common sources of financing include bank loans, SBA loans, lines of credit, and franchise-specific loans in cases where the franchisor offers financing or has financing partners. Feeling a bit lost when it comes to securing financing? Schedule a call with us, and we will help you compare your options based on your long-term goals.

Finalization Phase (2 to 4 weeks)

You are almost to the finish line! Your final steps are to finalize the agreement with the parent company, pay your fees, and prepare to start getting your franchise set up.

Sign the Franchise Agreement

Once you’ve secured financing for your franchise and are happy with your franchisor’s terms, it’s time to sign the Franchise Agreement (FA), which outlines your legal obligations to your franchise, plus details such as fees and operational procedures.

After signing the FA, making changes to your business arrangement becomes much more challenging, so do not rush through the process of checking the FA. Your franchisor may request that you sign the document within a specified timeframe, but you can usually ask for an extension if you have a valid reason.

I can’t stress enough just how important it is to go through the FA thoroughly. It dictates your obligations, fees, and expectations for the duration of your franchise term. 

Pay the Franchise Fee

Along with signing the FA, you’ll need to pay your franchisor the initial franchise fee. In return, you’ll secure the rights to use your parent company’s trademarks and sell their services. It can take a few days for the franchisor to receive the funds once transferred, after which they will also sign the Franchise Agreement.

Choose a Site for the Franchise

Congratulations! You are officially a franchise owner. Now the real work begins.

Your franchise’s location will dramatically impact its profitability, so don’t let eagerness get the better of you. Spend at least a few weeks scouring the market for potential franchise locations, and potentially a few more narrowing down your options before opening any negotiations.

I suggest shortlisting at least three or four different locations rather than pinning all your hopes on one. Problems with lease terms, zoning regulations, and landlords can all cause costly setbacks and delays. Plus, if you have multiple suitable locations, you may have some leverage when it comes to negotiating the fee and your rights.

Getting the Location Set Up (4 to 12 months)

The most time-consuming step is likely getting set up and preparing to open your doors after purchasing the franchise. Depending on your franchise industry, size, location, and the number of staff you need to hire and train, this step can take up to a year.

Site Build Out

Once you’ve chosen a site for your franchise, you’ll need to renovate it to ensure the layout, design, and signage comply with your franchisor’s branding and operational requirements. Depending on the extent of the work required, this stage could take two to four months.

Franchisors will often provide field experts to help you find suitable locations in line with the parent company’s expectations. When negotiating the terms of your FA, you can often request additional help with site location and renovations if you can prove it is in the franchisor’s best interests.

Hiring

The hiring process for a new franchise can take as little as four weeks or as long as six months. Recruitment tends to be more efficient when working with well-established franchisors who have comprehensive training manuals, clearly defined job roles, and internal operational procedures. However, tasks including posting job listings, identifying employee scheduling requirements, interviewing, and onboarding can take several weeks each.

Training Staff

Once you’ve hired a team of employees, you need to get them up to speed with their job roles and your business. Depending on how complex the franchise’s operational procedures are, training employees can take a few days or weeks. Your franchisor will also likely provide hands-on assistance and training to help you hit the ground running.

Marketing Your New Franchise

Your franchisor will take on most (if not all) of the responsibility of marketing to a national audience, but you’ll still want to implement strategies to capture your local market. Marketing is an ongoing process, but I recommend spending at least a few dedicated days or even weeks developing a strategy on how to spread the word about your new franchise. 

Opening Day

Once you have everything set up and ready to go, it’s time to open your doors and start serving customers. Most franchisees are required to hold a grand opening day to raise attention and attract customers. Planning this grand opening could take weeks or even months, though your franchisor will likely offer a lot of assistance.

Factors Affecting Your Franchise Opening Timeframe

Here are some factors that will affect how long it takes to get your franchise up and running.

Your Ability to Secure Financing

Naturally, if you can use your funds to open a franchise, this step will unlikely cause delays. However, comparing loans, negotiating terms, and going through the approval process can take weeks or even months. You may be forced to jump through several hoops before you receive the finances you need to get moving.

Long Approval Processes

Banks aren’t the only institutions that can cause delays with long approval processes. Opening a franchise requires obtaining all sorts of permits and licenses. You’ll also need to wait for a landlord’s approval to sign a lease, your franchisor’s final approval over your location, and much more.

Navigating Complex Legal Matters

At the federal level, you’ll need to comply with various laws and regulations (such as the FTC franchise rule) to operate a franchise legally. You may also be required to comply with additional laws at the state level, depending on your industry. For example, Nevada hotels are often required to obtain gaming licenses due to their proximity to casinos or their in-house services.

Finding a Suitable Location

Finding a suitable location can be a long and drawn-out process, but it’s one you can’t afford to rush or cut corners with. Even when you find what you think is the perfect location, plenty of factors can cause delays, from waiting for your franchisor’s approval to problems with the lease terms and obtaining local permits.

Renovations and Construction

Last but not least, how long it takes to renovate your property in line with your franchisor’s guidelines can have a huge impact on how long it takes to open a franchise. 

Take Control of Your Franchise Timeline

Opening a franchise is never an overnight process, and in most cases, it can take anywhere from a few months to over a year. Having a strong understanding of the steps involved can help you stay on track and avoid costly delays. Need help navigating the process or choosing the right franchise? Connect with a franchise expert at Franzy for a free consultation!