The allure of owning a business is strong, but the path to entrepreneurship is fraught with challenges. The franchise model is one avenue that comes with lower risk and higher success rates. According to LendingTree, about 50% of businesses in the United States fail within five years, but that statistic significantly shrinks when it is only franchise businesses. Entrepreneur found the average percentage of terminations and closures of franchise businesses after five years is 3.9%. 

A franchise owner — also called a franchisee — owns a location of a certain franchise. Discover what franchise owners do and how to become a franchise owner. 

What Does Franchise Ownership Mean?

In simple terms, owning a franchise means running a local branch of a larger, already-established company. The franchisee is the person who funds the location and oversees operations, from day-to-day management to long-term planning. While the franchisee benefits from the parent company’s established brand, business model, and support systems, they are responsible for their location’s success. 

Role of a Franchise Owner

As the person at the helm of a franchise location, the owner handles various tasks that ensure the business’s success. These tasks include overseeing daily operations, managing staff, and ensuring customer satisfaction. The franchise owner also plays a crucial role in local marketing efforts, adapting corporate marketing strategies to resonate with the local community. Financial management is another vital responsibility that involves budgeting, revenue tracking, and expense management. 

The franchisee is also in charge of maintaining compliance with the franchisor’s specifications. While the franchisee has the autonomy to manage the local branch, they must adhere to the guidelines and standards set by the franchisor to keep brand consistency and quality. This unique blend of entrepreneurial freedom and structured guidance makes the role both challenging and rewarding. 

How to Become a Franchise Owner

These steps can guide potential franchise investors through the process of how to become a franchise owner. 

1. Research & Exploration

The first step in becoming a franchisee is research. Potential investors should explore various industries and companies to find a franchise that aligns with their interests, skills, and financial capabilities. Resources like the Franchise Business Review, Entrepreneur, and Franchise Times can offer valuable insights into the most successful and reputable franchises. 

2. Due Diligence

Once a franchise is selected, the next step is due diligence. This involves a deep dive into the franchise’s operations, financial requirements, and legal obligations. The Franchise Disclosure Document (FDD) is a crucial resource at this stage, providing detailed information about the franchise’s history, fees, and contractual obligations. It is recommended that a potential franchise owner reviews the FDD with an attorney before signing any documents. Additionally, it is essential to understand the market and industry demand to ensure the franchise has the potential for growth.  

Understand the type of training and support a franchisee receives. The benefit of franchising is the guidance from the franchisor that allows entrepreneurs to jump into an industry where they may not be an expert. 

For example, AtWork, one of the nation’s leading staffing franchises, takes franchisees through an owner’s launch camp, and then they bring the owner and their staff to the headquarters to undergo in-depth training. Following that week of training, a field operations representative comes to the new location to ensure all systems are implemented correctly, and operations are running efficiently. Ongoing support includes access to subject-matter experts in staffing operations, recruiting, training, and marketing. 

To gain a well-rounded perspective, connect with existing franchisees. Their insights into the challenges and rewards of the venture are invaluable. Potential franchisees should ask whether the support and training were sufficient to get their business up and running and if the initial investment costs were justified. 

3. Financial Planning

A crucial part of the process is financial planning. Potential investors need to assess their financial standing and understand the costs involved. These costs include the initial franchise fee, ongoing royalties, and other operational expenses such as marketing, inventory, and staffing. It is essential to account for these recurring fees in your budget. Most franchisors require a set amount of liquid capital to ensure their new franchisees can stay afloat for the first few months while they open and gain cash flow. Financial institutions often offer specialized loans for franchise investments, which can be a viable option for funding. 

There is a wide range of investment costs for franchises. ADP finds that franchise startup costs can be as low as $10,000 and as high as $5 million. For example, AtWork offers a lower initial investment range of $153,500 to $210,500 with a franchise fee of $40,000. AtWork requires its franchisees to have $100,000 in liquid capital. 

4. Apply for a Franchise

Once an entrepreneur has found the franchise they want to invest in, it is time to begin the franchise application process. The process and application contents depend on the specific brand, but it usually involves a detailed form about the applicant’s financial standing, business experience, and personal background. Some franchisors may also require applicants to submit a business plan outlining their vision for the location. Other items include references and an application fee. 

Upon receiving the application, the franchisor typically conducts a thorough review, including the applicant visiting the headquarters. The visit, often called a discovery day, is a critical stage for both parties to assess the fit and alignment with each other’s goals and expectations.  

5. Undergo Training

The last step in becoming a franchisee is signing the agreement and beginning training. As mentioned above, most franchise systems offer comprehensive training programs to equip new owners with the skills and knowledge needed for successful operations. Franchise systems also provide ongoing support in various aspects of the business, such as marketing, sales, and technology. 

Traits of a Successful Franchisee 

While the franchise model offers a structured path to business ownership, it is not a guaranteed route to success. Certain traits and skills can significantly enhance the likelihood of a profitable venture. 

• Entrepreneurial Mindset: A strong desire to succeed and a willingness to take calculated risks are essential. 
• Management Skills: Effective leadership and team management are crucial for day-to-day operations. 
• Financial Acumen: A good understanding of financial principles helps in budgeting, forecasting, and overall financial management. 
• Customer Service: Exceptional customer service skills can set a franchise apart in a competitive market. 
• Adaptability: Adapting to changing market conditions and consumer preferences is vital for long-term success. 

Take the Next Step With AtWork

Becoming an AtWork franchisee offers a unique blend of entrepreneurial freedom and structured support. It is an attractive option for those who wish to venture into business ownership but prefer a path with fewer uncertainties. The training and support offered by AtWork are unmatched. The franchise pays for itself through its payroll funding and other accounting assistance. 

Get started in becoming a franchisee with AtWork by filling out the franchise information form.