6 Things You Need to Know Before Opening a Franchise


Many people are drawn to the idea of owning a franchise because of how simple the business plan is. You’re starting with a well-recognized brand and systems are already set in place, so you can skip over some of the trial and error that would come from a business that’s being built from the ground up. But are franchises are as straight-forward as they would lead you to believe? Well, here are a few things you need to know before you open your franchise.

1. Profits Take Time

It’s easy to assume that buying into an established chain will mean that the profits will instantly start rolling in. But this isn’t always the case. Most franchisees find that they have a net loss for several months before they actually start to see the fruits of their labor. Why is this? Well, most franchises require fees for royalties, branding, training, and much more.

2. You’ll Be Drenched in Legal Jargon

Keep in mind that when you sign up to open a franchise, you could be signing your life away. This is especially the case if you’re speaking to the company’s salesperson. Their job is to make this sound like the best deal of your life. However, the devil is often in the details.

Before opening a franchise, it’s a good idea to do your homework so that you know the legal terms that will be thrown around and how they apply to you. You should also hire a lawyer so that they can go over the agreement and review the documents with you.

3. Your Success Depends on Market Conditions

Sure, the franchise you buy into maybe the most successful in its niche worldwide, but this doesn’t mean that you can ignore market conditions. In fact, the local market conditions will ultimately be the deciding factor in whether you fail or succeed.

There are several factors at a play–specifically your competition and how well your business can stand out. It’s a good idea to keep an eye on the latest reports for your industry. Consider the future, so that you are not too optimistic about the possible success of your business.

4. You Have to Be Able to Work Within Someone Else’s System

Starting your own company can be extremely exciting. And one of the biggest reasons for this is that you get to make all of the decisions. You come up with a vision and then set and work towards goals until that vision is finally realized.

However, this is not always the case with a franchised business. You may not always have the luxury of making decisions. In most cases, you have to work within the framework given to you by the company. Opening a franchise requires you to be extremely flexible and compliant.

5. It Requires a Significant Investment of Time

Opening your own franchise may be different from starting your own company, but that doesn’t mean you won’t work just as hard. In fact, in some cases, you may find that your days are much longer than if you were working on a startup. Is your franchise is seasonal? If so, certain times of the year may require much more of your time and attention than others.

6. An Exit Strategy is Essential

Most entrepreneurs don’t go into a business venture with a defeatist attitude. And this is why many don’t have an exit plan when the business fails to take off. However, an exit strategy is not an option when it comes to opening a franchise. There are some agreements that feature non-compete provisions which can make it next to impossible to find work after you have sold the business. So, before you go into this time-consuming, expensive, and challenging business, you should have a clear end goal in mind as well as a way out.


There are over half a million franchises in the U.S. This means that there are lots of opportunities available. But before you start your own, it’s important that you take the time to do your research. Take a moment to examine both the pros and the cons.


About Author

Kelly is DailyU’s lead blogger. She writes on a variety of topics and does not limit her creativity. Her passion in life is to write informative articles to help people in various life stages.

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