Starting your franchise business is probably one of the most exciting things you have ever done. And it should be! You’re embarking on a new career as your own boss. Before long, you will have customers and employees, and they’ll be some of your most valuable relationships.
It’s important not to get so focused on these relationships that you put your professional service suppliers on the backburner. These suppliers may be crucial to the success of your business.
Franchising is a collaborative business model, and that’s reflected in the supportive nature of the community. The franchise industry is full of specialists who are here to help entrepreneurs like you succeed. It is important to tap into this network and find professional service suppliers who meet your business’ needs.
Franchise law is complicated, even by legal standards. Enlisting the help of a lawyer who specializes in franchising will save you a lot of time and frustration. They have an understanding of the industry and are familiar with its ins and outs.
The most essential pre-sale service your franchise lawyer will provide is review of the Franchise Agreement for the brand you have chosen. The Franchise Agreement is the contract that outlines what is expected of you as a franchisee, and what you can expect in terms of support from the franchisor. Using a franchise lawyer rather than a general business lawyer will save you time and money, since they are familiar with the common language used in the franchise industry. Another benefit is that they can explain your agreement to you in plain English.
A great way to identify an attorney with a franchise-specific practice is to ask other franchisees in the system, or other related suppliers for a referral. Some full-service law firms have franchise specialists, and many law firms operate entirely within the franchising space. You should make sure to find a lawyer who has experience with entrepreneurs in your position.
US News World Report and Entrepreneur Magazine annually rank franchise law firms. Shop around, and don’t be afraid to ask tough questions about a firm’s experience working with franchisees. This is a big decision! The less worried you are about your legal matters, the more time and energy you will have to focus on becoming profitable.
As a franchise business owner, one of the most important tools in your toolkit is an experienced accountant. There are many benefits to starting your business with pristinely maintained books. Accountants can offer advice on tax mitigation, and help with budgeting to ensure that you achieve positive cash flow as soon as possible.
An accountant with experience in franchising will be familiar with the requirements of this type of business. In addition to tax accounting, franchise CPAs are familiar with other unique franchising considerations, such as startup fees, franchisor royalties, and in many cases, ongoing support for things like marketing and advertising. They also know what tax breaks to look for. Your franchisor may have specific guidelines for record-keeping and tracking key performance indicators (KPIs), which your franchise CPA will help you manage.
Effective accounting is important for more than just keeping your books clean; it also helps you maximize the value of your business.
Some accounting firms are wholly dedicated to working within the franchising space. Large firms such as the Big Four typically have franchising CPAs on staff. There are also many smaller full-service firms with franchise specialists. Entrepreneur Magazine’s most recent rankings feature a good mix of all of the above.
There are many different strategies for funding a business. It can seem overwhelming if you’re starting at square one. You may think that going to your local bank to obtain a small business loan would be the logical route. The fact is, many lenders aren’t interested in funding first-time business owners. They also may not understand the unique value proposition of the franchise model. That is why it’s advantageous to work with an experienced funding provider that specializes in the franchise space.
FranFund has been providing custom funding solutions for franchisees since 2006. No two businesses are alike, and we know that. We work with entrepreneurs to determine the best fit for their unique needs and circumstances. We make the process as streamlined and straightforward as possible, and we communicate with you about the process every step of the way.
Small Business Administration (SBA)-backed loans are a great option for entrepreneurs with the appropriate qualifications. FranFund has a network of partner lenders who understand franchising and are interested in funding franchise buyers. We offer free funding consultations as part of our FranScore® pre-approval process. Borrowers who we pre-qualify have a 99% success rate in obtaining their loans.
SBA loans aren’t the only way to fund your new business. A unique but very efficient and effective funding strategy is called Rollover for Business Startup (ROBS). ROBS is a process that allows business owners to use their own qualified retirement savings to invest in themselves, tax-deferred and penalty free. If used as the sole funding source, you may start your business without incurring any debt. The process is governed by the IRS and DOL, so it is critical to work with a trustworthy provider, both in the funding stage and throughout the life of your business.
When starting any franchise business, it’s helpful to lean on the franchise community’s vast support network, especially for your professional service suppliers. Your suppliers’ experience in the franchise space can make the difference between spinning your wheels and finding sustained success.
Money is obviously important, but it doesn’t need to be your primary focus, especially in the early stages of your business. Working with an experienced and trustworthy funding provider will take a lot of stress out of your path to small business ownership. That way, you can focus your time and energy on making your new business profitable and serving your customers. If you are interested in learning more about funding strategies for your new franchise business, we'd love to hear from you.