How To Start A Franchise Business [Your Expert Guide]

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Starting a franchise business can be a great investment. You get all of the benefits of being a business owner, but with less risk that most entrepreneurs have to deal with. You already know that the business model can be successful because other franchised locations are, and your only job is to run the business. Owning a franchise is a way for you to make sure that your money is working for you and becoming a profitable investment.

While owning a franchise is a great choice for many, there are likely steps that you might never have considered. That’s why Dream Vacations Franchise has created this expert guide to help you with everything you need to know about how to start a franchise business. 

What Kind of Franchise Should I Start?

When most people think of a franchise, fast food comes to mind. The truth is that a majority of the Entrepreneur’s Franchise 500 Rankings are not fast food, and there are opportunities that can cover everything from dance franchises  to crime scene cleaning franchises. From automotive and car franchise opportunities to sports and exercise franchises, you have your pick of industries. 

What Are Some Advantages & Disadvantages in Owning Your Own Franchise?

Owning your own franchise business comes with its own pros and cons. 


By joining a company and choosing to own a franchise, you become a business owner. Owning your own franchise business lets you have freedoms and relationships that you could never have before. 

Low Risk

Startups are a risky investment, and typically have a low success rate—only one in ten succeed. On the other hand, Dominique Lamb of Australia’s National Retail Association reports that franchises have a success rate of eight in ten. Choosing a franchise over starting your own company from scratch, therefore, switches from a 10% chance of success to 80%, a substantial improvement.


Autonomy and freedom in your own life and career is a major benefit to owning a franchise, without having to come up with all of the answers. As an owner, you have all of the abilities to run and manage your own business within the confines of your franchising agreement, but instead of having to create it by yourself, you have an entire company of support ready to help you when you need it. This might give you the freedom to work from home, or have flexible hours, while still being in charge of your business. 


You don’t always need experience to start a franchise. Generally, franchisors provide the training you need to make their model work for you. For some franchises, this includes weeks of training and help to make sure that your franchise location is profitable. This gives you the knowledge, experience, and industry secrets from the franchisor, rather than having to learn through trial and error. Additionally, franchises offer ongoing support, and are only a phone call away to answer questions, give training, and support you as you grow your business.


Franchises are significantly easier to get financing for compared to a startup business, due to their high rate of success. Not only are banks and other financing opportunities available, but part of financing can come from the franchisor. If you have a good credit history and are able to show proof of return on investment, you shouldn’t have a hard time finding financing. With Dream Vacations Franchise, you can get started with $3,500 down and rely on in house financing options to find a suitable option that meets your needs.

Marketing and Reputation Management

As part of a franchised corporation, you have access to an established brand reputation and image. You are starting with a product that is already recognized and respected. You do not have to worry about branding or development because it has already been done for you. Franchisors have a budget they spend on behalf of franchisees – taking care of things like TV commercials, promotions, and other advertising – as the franchisee, you reap the benefits of this promotional spend without having to pay anything out of your own pocket.


For some people, owning their own business doesn’t provide what they want. Here are a few of the disadvantages of becoming a franchise owner. 

Give up some control 

While you do own the franchise business, the franchisor does have guidelines that must be followed in order to best manage the brand cohesiveness. You give up some control —how much depends on the specific franchise—but you gain more in support, marketing programs, and technology that would be far more difficult to try and manage as an independent business owner. You simply have to match established standards, instead of having the freedom to set your own. 

Storefront Location Restrictions

There can be restrictions on where you can operate, the products you sell, and the suppliers you use. While you are paying to own the franchise, the franchisor still has the right to tell you where you can, and can’t, run the business regulate territories. Just because you know the ‘perfect’ spot to open a location, does not mean that the franchise is willing to have a store at that location. A home-based franchise like Dream Vacations wouldn’t suffer this disadvantage; but any franchise that requires a storefront would face restrictions.

How Does Owning Your Own Franchise Work?

Owning your own franchise gives you the opportunity to operate your own business. The franchisor may help in finding a location, initial training, advice on management or personnel, and may even provide support through newsletters, a support phone line, a website, or even scheduled workshops you can attend, but you are in charge of many other aspects such as finding customers.

To own your own franchise, you start with having to pay the initial franchise fees and other expenses. These fees cover everything from your website, technology tools  to training. As part of this cost, you will pay for insurance, and a royalty fee to the franchisor. 

Royalty fees are typically a percentage of your gross income. 

Types of Franchises

There are a few different types of franchises and they operate in different ways. They can include:

  • Job Franchise

A person runs a small business alone, typically from their home. They have to purchase limited equipment and stock, and it becomes their job.

  • Product or Distribution Franchise

This focuses on the supplier-dealer relationship, in which a franchisee distributes the franchisor’s products. At times, this can include not only distribution but also part of the manufacturing process, like in the case of soft drink manufacturers. 

  • Business Format Franchise

The franchisor is able to use the trademark of the franchisor as well as the entire system to operate the business. Typically the franchisor gives a detailed plan and walks the franchisee through all aspects of the business while giving training and support. This is the most popular type of franchise system. 

  • Conversion Franchise

This is a different version of franchising. It takes an independent business in the same industry and converts that business into part of an existing network of franchises. 

Where Do You Start?

It’s not as hard as you might think to become a franchise owner. 

When you are figuring out how to start a franchise business, the first step is to pick a franchise. How to buy a franchise is going to depend, to some degree, one what type you’re looking at. You need to decide which industry you’re going to be a part of, and the possibilities are numerous. You can become a franchise owner focusing on healthcare, construction, or even something as fun and exciting as travel which can give you the opportunity to explore and enjoy the world as part of your franchise

Do your research. Not every franchise is created equal, and so you need to shop around and find a franchise that best fits you, your budget, and your level of investment. 

Look into things like the average retention a company has with franchise owners, the cost and time of training, and the average revenue a franchisee can expect—although revenue information can often be difficult to find. Much of this info will be on the Franchise Disclosure Document, which is covered in more detail in the next section.

When researching, ask questions and remember that you are making an investment of thousands of dollars. You want to be well informed and know what you are agreeing to before you spend your money. Ask detailed questions, and expect detailed answers. If you are not happy with the level of detail that a franchisor is giving you, then either push for more information or move on. 

How Do You Start Your Own Franchise?

Once you have completed basic research into which company you want to franchise, opening your business can be an easy process. 

Once you reach out to a franchisor, you should get a Franchise Disclosure Document (FDD). The FDD will outline rules, fees, responsibilities, the company’s financial and legal history, and other important history. Make sure that you are aware of all of the expectations and requirements before moving on. 

If you are still interested, the company will often invite you to attend a discovery day. This is typically a meeting or event where you meet with the franchisor and learn more about the corporate culture, values, policies, and start networking. 

You will also be presented with the franchise agreement. Read and review it carefully. This is not a terms and conditions agreement for a website that you’ll never visit again. It’s a legal document that covers, in great detail, the future of your investment and the legal expectations for everyone involved. Make sure you understand every line in the contract. You will be expected to do whatever is written in the contract once you sign it.  

Before you sign the contract, make sure you have the correct funding. If you are able to pay completely out of pocket, you don’t have to worry about this step. You can consider an SBA loan, traditional bank loan, or franchisor financing. 

At this point, you need to prepare for Completing the necessary franchise training programs is key to making sure you’re ready to open. These trainings will teach you everything you need to know about your new business as well as marketing, and operation needs like the filing of permits and creating reports. Once done, you’re ready for your first day. 

Being Successful in Owning Your Own Franchise

There are a few characteristics and personality types that can make you a great franchise owner. 

Enjoy Structure and Proven Systems

Owning a franchise is about staying away from risk. You don’t want to do anything risky, dangerous, or unproven; you want to stick with what has been proven to work. This is an important part of owning a franchise because. 


The mantra that you’re going to hear throughout franchising is that you’re working “for yourself, not by yourself.” As an owner, you are not alone. Not only can you turn to your franchisor for help and training, but you can also turn to the network of other franchisor owners for assistance, tips, and tricks to help you find success. Franchises work best when their owner is willing to get help from others and reach out when they don’t know the answer to a problem. You need to be willing to use the materials and programs that are established to help you succeed. 

Hard Work Ethic

Owning a franchise is not easy. You will have to work hard and potentially work more than you did before you owned the franchise. Putting in long hours is normal for franchise owners, especially within their first year of ownership. You need to be willing to put in the time and effort, and not shy away from responsibilities. 

People Skills

Wanting to work with people and network with them is essential for your franchise. You need to be able to communicate with people and create a faithful client base that trusts you and wants to return to your franchise business. If you’re not a people person, but want to be better and grow this skill, just like there are resources to help you learn how to market or balance your books, there is also help on how to find and keep clients.

Mistakes to Avoid

A big part of learning how to start a franchise is learning from others. That can be the franchisor you are buying from, or from the past mistakes of others. Here are some common mistakes that people make when trying to become franchise owners.

Lack of Research

Many people want to own a franchise because they like the brand or company, and do not consider if it’s really the best business for them. By picking a company that has not proven its concept or stability, people put themselves at risk before the doors even open. 

Within that missing research is not understanding what it takes to be a business owner. The idea of owning your own business might be a great dream, but the reality of the work that needs to be put in is often overlooked. 

Unrealistic Expectations

While there is potential for you to have great success, be aware of the time and effort other franchise owners put in to get to where they are. 

Discounts and Promotions Are Available

Many companies provide discounts and promotions to people looking into becoming owners to help them get started. Dream Vacations provides discounts for US veterans and active-duty spouses, first responders (both active and retired), community heroes, members of DiversityFRAN, and experienced travel and hospitality professionals. They even have an annual contest for military vets that awards five veterans a free franchise. If that’s the sort of franchise you want to work with, don’t settle for less.