Purchasing a franchise is one of the best ways to dive into entrepreneurship without starting a company from scratch.<\/p>\n\n\n\n
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\u2019re unfamiliar with franchising.<\/p>\n\n\n\n
Wondering how long it takes to get a franchise business up and running? You\u2019ve come to the right place. In this guide, I\u2019ll break down the average timeframes for each step of the franchise purchase process and provide some tips for speeding things up.<\/p>\n\n\n\n
It usually takes between a few months and more than a year<\/strong> to open a franchise, though the process can take much longer in some cases. Simple franchising industries<\/a> such as home services<\/a> and financial services<\/a> can be set up within a couple of months, but businesses with more build-out needs, such as restaurants<\/a> and fitness centers<\/a>, will likely take a minimum of six months.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n There are many steps involved in the process of purchasing a franchise<\/a> and opening your doors to customers. Let\u2019s take a look at the amount of time you should expect each step of the venture to take.<\/p>\n\n\n\n The initial research phase for new franchisees typically takes between a few weeks and a few months<\/strong>, 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<\/a>, while others already have a specific industry and territory in mind.<\/p>\n\n\n\n Even if you have specific goals, you should spend a minimum of a few weeks performing your due diligence. You\u2019ll be placing a hefty investment in your franchise business, so it\u2019s important to make the right decision. I also suggest approaching existing franchisees<\/a> in the organization and asking questions to get some more insight into what running the franchise is like. During the research phase, you\u2019ll determine whether or not you are ready for franchise ownership<\/a> and find out if your expectations are realistic.<\/p>\n\n\n\n When you\u2019ve narrowed in on a few franchisors you\u2019re 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.<\/p>\n\n\n\n If the franchisor decides you might be a good partner, you\u2019ll generally be invited to a \u201cdiscovery day\u201d, which is essentially a \u201cmeet the team\u201d day. Usually, you\u2019ll be introduced to your franchisor and its executives at their headquarters, but some discovery days are held elsewhere or even online.<\/p>\n\n\n\n In most cases, these events span one or two days, and they give you the perfect opportunity to ask all of the questions<\/a> you\u2019ll inevitably have about the franchisor\u2019s business model.<\/p>\n\n\n\n Once your franchise application is accepted, you\u2019ll also be provided with your franchisor\u2019s Franchise Disclosure Document (FDD)<\/a>. This pre-sales document contains details about your franchisor\u2019s business, including company background information, financial performance, past litigation, royalty fees, estimated investment costs, and your obligations as a franchisee<\/a>.<\/p>\n\n\n\n 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 \u201cmarriage\u201d (business relationship).<\/p>\n\n\n\n With that in mind, I suggest spending a minimum of two weeks<\/strong> 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<\/a> for a free franchise coaching consult!<\/p>\n\n\n\n Now that you have decided which franchise to purchase, read through the FDD, and connected with the franchisor, it\u2019s time to prepare to buy the franchise. During this phase, you\u2019ll set up your franchise business entity, create a business plan, and secure financing to fund the venture.<\/p>\n\n\n\n You\u2019ll need to allocate at least three to six weeks to craft a detailed business plan<\/a> that includes startup cost estimates, sales projections, and local market analysis. How much time you\u2019ll need depends on how much data you already have and your familiarity with developing business plans.<\/p>\n\n\n\n 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\u2019s not unusual for it to take several months to craft a meticulous business plan.<\/p>\n\n\n\n Next, you\u2019ll 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. <\/p>\n\n\n\n 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\u2019ll also need to open a business account once you\u2019ve received your Employer Identification Number.<\/p>\n\n\n\n Unless you have access to a large amount of personal unencumbered funds, you\u2019ll 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<\/a>.<\/p>\n\n\n\n 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<\/a>, and we will help you compare your options based on your long-term goals.<\/p>\n\n\n A clear, step-by-step breakdown to help you decide if franchising is right for you\u2014and how to get started.<\/p>\n\n\n\n\t\t\t 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.<\/p>\n\n\n\n Once you\u2019ve secured financing for your franchise and are happy with your franchisor\u2019s terms, it\u2019s time to sign the Franchise Agreement (FA)<\/a>, which outlines your legal obligations to your franchise, plus details such as fees and operational procedures.<\/p>\n\n\n\n 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.<\/p>\n\n\n\n I can\u2019t 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. <\/p>\n\n\n\n Along with signing the FA, you\u2019ll need to pay your franchisor the initial franchise fee<\/a>. In return, you\u2019ll secure the rights to use your parent company\u2019s 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.<\/p>\n\n\n\n Congratulations! You are officially a franchise owner. Now the real work begins.<\/p>\n\n\n\nTimeline for Purchasing a Franchise<\/h2>\n\n\n\n
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1. Research Phase (2 to 8 weeks)<\/h3>\n\n\n\n
2. Application Phase (4 to 12 weeks)<\/h3>\n\n\n\n
Discovery Day<\/h4>\n\n\n\n
Read Through the FDD<\/h4>\n\n\n\n
Preparation Phase (4 to 16 months)<\/h3>\n\n\n\n
Craft a Business Plan<\/h4>\n\n\n\n
Create a Business Entity<\/h4>\n\n\n\n
Apply for Funding<\/h4>\n\n\n\n
Download the First-Time Franchisee Guide<\/h4>\n\n\n\n
Finalization Phase (2 to 4 weeks)<\/h3>\n\n\n\n
Sign the Franchise Agreement<\/h4>\n\n\n\n
Pay the Franchise Fee<\/h4>\n\n\n\n
Choose a Site for the Franchise<\/h4>\n\n\n\n