One of the best ways to start a business is through franchising. This model gives entrepreneurs a chance to open an already-established business. But with all that franchising provides, it’s important to do some due diligence before spending your hard-earned cash to buy into one. In the guide below, we explain what you need to know if you’re considering this type of business.

What Is a Franchise?

A franchise is a business model owned by one or several people (franchisees) who provide services or products under a much larger or parent corporation. There are various types of franchises, such as job franchises, conversion franchises, and business format franchises.

How to Get into a Franchise

Because of all that franchising provides, it’s not uncommon to hear entrepreneurs get into it. But where does one start? Like any other type of business, the most crucial step is researching the franchises you’re interested in. Don’t just focus on the most popular ones, as that doesn’t mean they are necessarily right for you.

Once you find the right franchisor, start the application process. A business attorney can be very helpful during this step. Franchisors will check your finances to ensure you have enough cash to keep the doors open. They’ll also check your background, where you plan to open the business and ask why you’re interested in that franchise.

Franchising Initial Investment Costs and Fees

Owning this type of business means spending money before you start making money. Besides the usual business startup costs, you’ll pay a franchise fee. It’s what you pay to operate your business. This cost varies depending on the franchise. On top of the initial fee, you’ll also pay royalties and ongoing marketing fees. Such costs will be determined by the amount of money your business is making.

You’ll need financing before you can enjoy all the benefits that franchising provides. During your planning step, start exploring different financing options to find what works best for you.

Have you found a franchise you’re ready to get into but lacks the finance? Talk to Hemingway Financial Group. We are prepared to support you in this new business venture.