How to Start a Franchise Business

Franchising is a legal and commercial agreement by a person to use the intellectual property of another individual, a company, or group. You can either enter a franchise for a product/trade name or a business format.

If you get a franchise for a business, you subject yourself to the franchisor's method of conducting business and agree to sell goods or services supplied by the franchisor, and meet their quality standards.

Looking for a Franchisor

The search for a franchisor is on top of a prospective franchisee’s list. That is why many literatures are devoted to helping potential investors choose a franchisor. Most experts recommend that you do your homework to avoid costly mistakes. You could start by asking at least two competing franchisers for their offering circulars, visiting franchise trade shows, contacting a franchise agent, talking to people who have set up a franchise. It is even better if you can talk to franchise owners who are into a franchise similar with the one are interested in. Investing in companies with services or products that you know or interested in is always a sound move.

Look for a franchisor with good figures for franchise turnover. This information is contained in the Uniform Franchise Offering Circular, a disclosure document required of franchisors. While typical returns aren't stated in the circular, they can be calculated from the revenue and expenses disclosed. Also look in the circular for all administrative, criminal or civil litigation that a franchisor faced or facing to be warned to avoid those that have several lawsuits in their record.

Focus on tried-and-tested name brands, though be warned that they are naturally more expensive to subscribe to. These products or services have already been tried, operating, and recognized, and therefore, are most surely to be successful. And owners of such highly recognized brand names are better equipped to fight legal problems, if any, because of their long experience.

Also study the size, territory, and customer base of your prospect. Prefer core goods and businesses -- necessities that don't depend on customer's disposable income. In selecting a site, you might be tempted to opt for marginal location because it's cheaper, but a highly priced good location could pay off in the end -- and you are only paying for it once.

Ask for recommendations from former franchisees if possible. You could find their contact information in the circulars. In determining how successful a potential franchise is, look at the number of franchise that are in operation and how long has the franchisor and its franchisees have been in operation. Also look at the failure rate.

And of course, compare costs -- all costs that may be required of you in getting a franchise. The cost of a franchise is different from one company or industry to another because each has its own financial requirements, depending on factors such as the size and location of the franchise. But usually, you will be required to pay a franchise fee, built-out costs for your location, professional fees, contractor fees, signage and inventory. These, you should shoulder.

All these surveys are must before proceeding further. You can always hire a franchise business consultant to help you figuring what kind of business you should start, where to start, how to find a franchisor, how much you should invest and etc.

Franchising Costs

The initial franchise fee typically costs between $10,000 and $80,000, literatures say. Those that are lower than $20,000 or $10,000 are often home-based or mobile. The initial franchise fee will usually cover the cost of training, support and site selection. But because franchise fee varies from one company to another, some would exclude these and cover only the upfront licensing fee for the rights to use the franchise name. That is why it is necessary to look into the contract to see what's inclusive in the fee you are paying. Viewing the circular also comes with a fee, though there is no set fee for this.

Once you have decided on a franchise and a site, you will be given an estimate from the franchisor of your overall build-out costs, including furniture, fixtures, equipment and signage.

You may be required to buy between $20,000 and $150,000 worth of inventory, and supplies to properly run your business. And of course you will need day-by-day cash to fund your business. Ongoing costs may include the royalties you pay to your franchisor, which is four to six percent of revenue. It will also include advertising fees, equipment maintenance, employees, insurance, and inventory. This amount will depend on the type of business, but it is important that the amount you would come up with will last from a reasonable period of time, from months to three years. The franchisor typically provides an idea on how much you would need.

Generally, lodging franchises, which require the largest initial investment and ongoing expenses, would cost between $4 million and $6 million in total, according to It is followed by full-service restaurants, which could require from $700,000 to $3.5 million. Fast food restaurants would need from $250,000 to $1 million, AllBusiness says.

The Process of Starting a Franchise Business

After you've decided on a franchisor, and gotten all the information about the franchisor, you usually contact the franchisor and present your request or application. Franchisors might require certain information to be included in your application. Several meetings will follow in which you will learn more of the business, and how it works, sometimes with an optional visit to one franchise. If the application requires a site proposal on your site, the franchisor will have to approve of it. Once the discovery is done, the final decision and acceptance will be made. The franchise agreement will be signed with them approving your application and you agreeing to their terms.

To facilitate all of these, you might need to hire an accountant to review the audited financial statements or a franchise business consultant. Or get a lawyer to help you review the legal documents. Budget between $1,500 and $5,000 to pay the fees of a franchise attorney, depending on the length of time you will be needing the professional service.

Advantages of Starting a Franchise Business

Most business experts agree that the benefit of franchising rather than starting up your own business from scratch has the lower risk of failure. If you are franchising, you are dealing with a produce or service that has already been tried and operating, and possibly a brand name that is already recognized. You also get the expertise of the franchisor by availing of their training and formal instruction, and getting management and marketing assistance from them. This could help reduce costly errors. Still, another advantage is that you could possibly obtain lower-cost goods and supplies by getting them from a franchisor, which has a greater purchasing power because it buys goods in bulk.

Further, a franchisor could offer you assistance in financing by making arrangements with a lending institution. You still shoulder the responsibility for the loan, but the franchisor's endorsement could help you actually get the loan.


  • Mandla Maseko said on May 31, 2009
    i need financial assistant to patent a business idea.
  • Ulysses Johnson said on August 21, 2009
    hey my name is Ulysses. i just wanted to how to know franchise with sonic. I have a grant idea and a good location. Can you please send me more information.
  • Joseph Makola said on May 21, 2010
    Need the application forms for the KFC franchise, RSA, North West Province, Rustenburg.
  • Mujtaba K Sherwani said on August 15, 2010
    I want to open a franchise of anything ranging from fast food joints to car or bike showrooms. please provide me necessary details regarding this. I am from Lucknow capital of Uttar Pradesh, India
  • Shazia Sultana said on August 17, 2010
    hi, I wanted to take up a Airtel Franchise at Bangalore, Kempapura Kindly help me with the contact person details
  • yusuf omer osman said on January 6, 2011
    hi, i want to open a franchise of fast food, foot wears or clothing. please provide me with information regarding these. i have a good location for business in joberg and springs.
  • siddharth s gandhi said on March 12, 2011
    hi respected sir i am looking to take airtel franchise in bangalore let it be in form of distributor or airtel outlet i have a 20\40 showroom in city market area which is in prime location
  • amit verma said on June 13, 2011
    hi respected sir i am looking to take airtel franchise in Lucknow/jankipuram let it be in form of distributor or airtel.Plz Send the information Mo.+919236010372
  • Anuj Dixit said on June 15, 2011
    Hi.. we are a Mumbai Based Financial Services Company proving Broking, Investment Banking, Private Wealth Management, Real Estate and Estate Planing. We are looking for a Master Franchisee in Kerla who will provide all the services offered by us (like Broking, Estate Planning,Private Wealth Management etc.). The Master Franchisee will appoint Franchisee under him and the revenue will be shared between Franchisee , Master Franchisee and Us. Interested party please mail me on or call on +919891667208 Thanks & Regards Anuj Dixit
  • jithesh panicker said on June 16, 2011
    hai, i am planing to start a fast food company franchise in kerala .do i need register a company , because i am along no partnership.
  • midhun said on October 25, 2011
    Hi, am cochin, kerala. we are inviting franchise all over kerala. It is a MNC and branches in 74 countries. So call me for more info. 9809639078
  • salman ali said on October 29, 2011
    HI i am planing to start fast food company franchise in Hapur, I have a good location in city, Can you please send me more information.
  • Fred said on November 10, 2011
    i am a transport provider for courier services with two long wheel base toyota hilux. i am willing and also providing courier services in and around Polokwane. Any one looking for courier service delivery dont hesitate to contact me on 0799643720. All my transport are brand new. I can deliver all over the country as per the agreement made between us. I am always available for your assistance and inquiries. I am located in Polokwane
  • Kola said on December 20, 2011
    Hello sir, could you please help me to get a franchise or an investor from any part of the world. I want to start a mechanical road and parking lot sweeping business in Lagos Nigeria. Please help.
  • sanele said on February 25, 2012
    I would like to start a petrol franchise at Mount Flethcer, South Africa.
  • mireille said on February 29, 2012
    Hello dear, i need to invest in a good business could you lead (propose) me and provide all the info how much money required please let me have your suggestion so i can chose from there. Thank you
  • naveed khan said on August 1, 2012
    hi i am planing to involve in new venture so plz help me in getting some new details of frenchiese of mobile and computer hard ware i have good location in aurangabad maharashta
  • ravi maurya said on October 31, 2012
    i want to start kfc franchise in pimpri chinchwad pune india ,i want to know the norms and available franchises let me know
  • Debrah johnson said on November 5, 2012
    Hi, i need to buy a franchise, but i dnt have money to start, can someone help me please, my company name is debopheko, trading and projects. i need kfc in swarttreggens, is my town i am from rural place, i need help
  • tanweer alam said on December 27, 2012
    i need airtel franchise airtel in gopalganj bihar my mobile number 9934253535
  • Jora said on March 7, 2013
    I am interested in airtel internet broadband connection distributor for my state's (Arunachal Pradesh)capital, Itanagar. I would like to know if airtel provides franchise for different services and also would like to know if there is any openings for our place for afforesaid service that you know of. I would be grateful if could revert back to me with detail information. Thank you.
  • manish khatri said on April 27, 2013
    hi, i'm manish khatri i want to open kfc franchise in pimpri chinchwad area in maharashtra pls let me know the norms & detail required by the company
  • snehal gawande said on June 16, 2013
    hello sir, i completed b.pharm n right know i'm doing PGDM IN PharMa n want to start my own buss in nutraceutical ..protc like to tk franchise so plz guide me AURANGABAD MAHARASHTRA INDIA PH NO 8087501941
  • VIKASH GUPTA said on January 6, 2014
    sir, i want to start the new business like to take franchise. thanks vikash gupta 9415527825
  • choton das said on February 20, 2014
    sir, i want start the new airtel mini store
  • artemis said on March 2, 2014
    hi, i would like to become a franchisee of Celio ( men fashion brand)in my country (Iran) but i require to know about franchise fee and other main cost and required investment. would you please kindly give me some valuable advices to help me in this way?
  • alex said on April 28, 2014
    I am from Itanagar, Capital of Arunachal Pradesh. I would like to avail Airtel broadband internet service provider franchise for my place. But I can't seem to find whom I should be contacting for the same. Could you please help me find contact details ? And also if you could provide me info regarding the process for availing franchise, I'd be grateful to you.
  • khan said on June 25, 2014
    Hello @shazia have you started a mini store or not...if yes plzz help me
  • abhishek gupta said on June 28, 2014
    sir, i want to get started a franchise business of airtel in lucknow please help me to whom should i contact. if you could provide information regarding the process for availing franchise i would be grateful to you. my contact no is 08896737158 , 05224076867 . please inform me soon .
  • toko annu said on July 7, 2014
    sir, can u please suggest me some broadband companies in india. so i can take it as franchise in my state.....cont....9402220313
  • ABHINAV said on September 8, 2014
    sir can u please suggest me some companies of medicine in india. so that i can take franchise in my state uttarpradesh.
  • Mlibo qotoyi said on September 10, 2014
    Hello sir I am looking to start up a new franchise I have the name for the franchise a general idea of what it must be. i need help on how to start and information about a few things. south Africa.0827555787 thanks
  • gowtham said on September 17, 2014
    Need Airtel broadband franchise. kindly help. contact: 9655845843
  • Sanaulla said on January 9, 2015
    hi, I wanted to take up a Airtel Franchise at Kollegal taluk chamrajnagar district, Kindly help me out with the contact person details. My contact no is 9986488841, Regards Sanaulla
  • Rajesh.b said on March 25, 2015
    Hello, i want expecting indias new branded franchise please let me know 9916387054
  • Praspero Kumar Sahoo said on October 8, 2015
    Respect Sir, I am new business for Airtel Ministore at Kaliapani,Dist-Jajpur,Odisha,Pin-755047.Please provide this procedure in system .How many amount are investment in this store.Please for your kind information and necessary action. Regards, Praspero Kumar Sahoo Mobile No=9238534255
  • R PRAKASH NAIDU said on March 1, 2016
    Hi, I want to start a solar energy business in Tamil Nadu, Chennai. Please provide me full information like how can I start this business, and what is investment, and other requirements. Call : 09381246800, 09025311144
  • wasif ayaaz said on April 9, 2016
    I want to start airtel broadband to get start.please suggest i am from. baheri distt bareilly u.p. india.
  • wasif ayaaz said on April 9, 2016
    I want to start airtel broadband to get start.i am from.baheri distt bareilly up india 7248100844
  • Bhanu prasad said on April 22, 2016
    I want to take Airtel mini store in my town. My contact number is 8106431468. Please help. Thanks in advance.
  • VIJAY KUMAR said on May 12, 2016
  • sibi said on June 7, 2016
    hi, I wanted to take up a Airtel Franchise at Pavaratty Panchayat Trichur district, Kerala , Kindly help me out with the contact person details. My contact no is 971507933400, Regards Sibi
  • SUNIL said on June 16, 2016
    how to get start with airtel Franchise. Please inform this no-+918967657495. Purulia.723121. W.B
  • M Chowmoung said on September 27, 2016
    hi, i want to setup franchise of a company in chennai as working as a distributor in that company. So i'm in need of a good investor and also want to know the actual cost for setup any franchise in chennai, cost for registration and license.
  • Manu Agrawal said on December 25, 2016
    Hi, I want to open the franchise of a company in mathura .....I want to became a member in airtel company.... My contact no. 8865872808, 9520380075
  • vinayak said on December 27, 2016
    hi, i'm vinayak i think and plan to open a clothing store in my town ....but i don't have money ...who will help who is give loan please tell....
  • A J beginner adviser said on May 19, 2017

    Hi! I'm from Negros Occidental, Philippines and i'm looking for 7 eleven investor. Email me at || Sugar Cane Farming Adviser


    (All the above fields are required.)


    Popular Articles

    Join Our Newsletter