When starting a business, especially in the restaurant and hospitality industry, many entrepreneurs choose to open a franchise instead of starting from scratch. This is a great way to reduce certain risks while benefiting from all that entrepreneurship and owning your own business brings.
Checklist: Are You Ready to Own a Hospitality Franchise?
Though buying a franchise is oftentimes easier than building a business and brand from the ground up, there are still certain requirements that need to be met.
The specific requirements you need to meet will differ from one franchise to the next, however, you can expect to see five with nearly any company:
To start a franchise, you need to be able to pay the upfront fees. These are a one-time
payment needed to join the franchise system and access resources. This initial fee can range anywhere from $10,000 to upwards of $100,000.
If you don’t have the cash on hand, you aren’t out of the running. There are many options such as franchise financing, business loans, home equity loans and partnerships that can help you get what you need. For more information, check out our blog on how to start a franchise with no money.
- A business plan
It’s very rare for an entrepreneur to find success without a business plan. A business plan outlines how your business will bring in money and run day-to-day operations. It highlights your goals, your plan for achieving them and your financial investment/returns. A business plan is also critical to obtaining loans.
- Business skills
While franchisors will provide tools and resources to help you with their systems and brand, you still need to have an understanding of business in general. This includes accounting basics, how to read financial statements, human resources, conflict resolution, management skills and more.
If you already have these business skills, that’s great! If not, be sure to find out if your selected franchise offers help in these areas. If they don’t, look for a local or online course to help you brush up on your business skills. Doing so will help improve your success even further.
- Legal obligations
Every business comes with regulations and legal requirements. Some are dictated by provincial and federal governments, some come from the franchisor, while others are industry specific. Regardless of who is creating the obligation, you must ensure you understand and meet each one. This includes permits, licensing, educational requirements, training, payroll management, tax remittances and more.
- A team of professionals
You may have heard the phrase, “nobody is good at everything, but everybody's good at something.” This has never been truer than it is in the business world. While a general knowledge of each area of business is important, what’s equally as important is having a team of specialists who can help ensure you have the information you need.
When it comes to running a franchise, this includes, but is not limited to, an accountant, a legal specialist, an HR consultant and more.
The good news is, if you find the right franchisor, they will be able to assist you with expertise in many different areas of your operations. Where they are not able to provide assistance, they will help you find someone who can work with you or provide you with resources for finding a great team.
While these are just some of the requirements that potential franchisees may have to meet, checking all these boxes will help prepare you for your franchising journey and increase your rate of success.
Are you interested in learning more about opening your own franchise? Contact Sculpture Hospitality today.