Starting a franchise is one of the most exciting ways to become a business owner, especially if you're ready to take control of your career but don't want to start entirely from scratch.
It blends the thrill of entrepreneurship with the safety net of a proven business model. But even with the structures in place, there are still some surprises that first-time franchise owners don't see coming.
If you've landed here exploring how to buy a franchise or comparing the advantages of buying a franchise vs. starting your own business, these five tips will help you kick franchise ownership off on the right foot.
What is Franchising?
Franchising is a popular way for individuals to own their own business, with the support and guidance of an established brand. According to the International Franchise Association, almost 4% of all small businesses in the U.S. are franchises, generating over $2.1 trillion and employing 18 million Americans. When considering franchising, it’s essential to understand the concept of franchise fees, which can range depending on the type of franchise and industry. Conducting a thorough franchise business review is crucial in evaluating potential franchise opportunities. Research the franchisor’s reputation, training, and support services before making an investment. This due diligence will help ensure that you choose a franchise that aligns with your goals and offers the support you need to succeed.
1. Before You Buy a Franchise Business, Ask Yourself These 4 Questions
It's easy to get excited about a brand you love. But when you buy a franchise business, you're not just buying a logo; you're stepping into a business model. That means your lifestyle, skills, and long-term goals need to align with what the franchise demands.
Here's what to consider before diving into franchise ownership:
What are your skills and interests?
It's important to find franchise brands that match your background, as aligning your strengths with the right industry will increase your chances for success and enjoyment. Matching your expertise with the franchise industry is crucial for long-term success. Ask yourself:
- What skills and interests do you bring to the table?
- Does your background align with certain industries, like construction or landscaping?
- Could you find greater success and enjoyment by choosing a franchise that matches your strengths?
- And if you don't have technical experience, are you open to learning new skills to become a franchise owner?
What do I want my work-life balance to look like?
Before buying a franchise, it's important to know the required day-to-day involvement. Some franchise owners prefer to be passive, so be honest about how you want to spend your time. Think:
- Do you want to be hands-on with your franchise business, or would you rather manage from a distance?
- How much day-to-day involvement are you willing to commit to operate the franchise successfully?
- Is passive ownership important to your lifestyle goals?
Do you know anything about the industry’s stability?
If you’re looking to make owning a franchise a long-term career, it’s important to look for franchises in resilient industries. Home services, for example, often thrive in any economy and are considered good franchises to own for long-term reliability. Ask yourself:
- Are you choosing a franchise in an industry that stays strong even when the economy shifts?
- Have you considered why home services are often viewed as good franchises to own for long-term success?
Additionally, resilient industries often streamline business development by providing essential resources, such as market research and business plans, which allows new franchise owners to focus on operations rather than the complexities of starting a business from scratch.
What support systems are in place?
A franchise is only as good as the help you get. The best franchisors offer training, marketing resources, and ongoing support, especially important if you're new to the field. Ask yourself:
- Does the franchisor offer strong training and ongoing support to help you succeed?
- Will you have access to marketing resources, operational guidance, and a network you can rely on, especially if you're new to the industry?
2. Best Practices for Researching Franchise Ownership Opportunities
Researching franchise opportunities is a critical step in finding the right franchise for you. The Franchise Business Review provides a comprehensive list of top franchises, making it a valuable resource. Evaluate each opportunity based on factors such as the initial franchise fee, royalty fees, and the level of ongoing support provided. Potential franchise owners should also carefully review the Franchise Disclosure Document (FDD), Franchise Agreement, and marketing materials to understand the business model and potential for growth. The Federal Trade Commission (FTC) offers guidance on how to research franchise opportunities and avoid common pitfalls. By thoroughly evaluating these aspects, you can make an informed decision and choose a franchise that aligns with your financial and personal goals.
3. Buying a Franchise Isn’t Just About the Price Tag
A common mistake when learning about how to buy a franchise is focusing only on the upfront investment. But understanding the full financial picture means looking beyond startup costs.
- Initial Investment: Franchise fees, equipment, real estate; these factors can vary wildly. Comparing a mobile cleaning business to a full-scale restaurant doesn’t make much sense. Know what is included before comparing numbers.
- Ongoing Fees: Royalties, marketing contributions, and technology fees are important considerations. Make sure you factor them into your cash flow.
- ROI Reality: A bigger investment doesn’t always mean bigger profits. Be clear on what kind of return you desire, and how long it’ll take to get there.
If you’re serious about owning a franchise, we recommend speaking with a franchise business consultant.
4. Consider Franchise Revenue and Profitability
Let’s talk about profits. Because while becoming a franchise owner sounds great, the real question is: will it pay off?
The answer depends on:
- Revenue Streams: Some franchises rely on recurring services, others on high-ticket seasonal sales. Think about what kind of cash flow works for you.
- Scalability: Is this something you can grow over time? Can you add new territories or open more units?
- The FDD (Franchise Disclosure Document): Pay close attention to Item 19, which may include earnings data. If included, it’s your best clue about what’s realistic to earn.
- Look at Growing Franchise Industries with Opportunity
You don’t need a fryer or a food truck to buy a franchise business.
Some of the best opportunities right now are outside of food and retail. Home service franchises, in particular, are growing fast, and they offer serious benefits like:
- Lower Overhead: Some are home-based, so you skip the storefront costs.
- Flexible Schedules: Great for families or people seeking work-life balance.
- In-Demand Services: From plumbing to HVAC, homeowners always need help. If you’re searching for good franchises to own, don’t skip this category. It’s full of high-reward businesses that often fly under the radar.
6. Choose the Right Franchise Brand
When exploring franchise opportunities, choosing the right brand is a critical step toward long-term success. It’s important to align your personal interests, skills, and market needs with a franchise that offers strong support and proven systems. Neighborly makes this easier by offering 19 home service brands, giving aspiring business owners the flexibility to find a fit that matches their goals and local demand. Since availability can vary by region, location plays a key role in determining which franchises are open in your area. To get started and discover which Neighborly brand best suits you, take our quick Brand Quiz.
7. Veterans Make Exceptional Franchise Owners (and How to Start)
If you're a Veteran, you’ve already got the skills to succeed in franchising: leadership, discipline, operational know-how. Franchise owners thrive on that. Veterans can create a successful franchise by leveraging these skills to develop a comprehensive business plan and establish effective marketing strategies.
Plus, there’s support out there designed just for you:
- VetFran Program: Founded by Neighborly®, this initiative helps veterans with education, training, and often discounts on franchise fees with select brands.
- Specialized Training: Many franchisors offer onboarding tailored to Vets transitioning to business ownership.
Franchising can be a natural next step for Veterans wondering how to become business owners with a purpose and proven path.
Unlock Your Path to Buying a Franchise
While we can't cover everything in one article, our Franchise Ownership 101: The Ultimate Guide will help you learn everything you need to know about buying and starting a franchise, so you're prepared to evaluate your options.
With decades of experience and a network of trusted brands. Neighborly has become a leader in the home services franchise space. Franchise owners benefit from a built-in customer base, cross-brand marketing opportunities, and a strong community of fellow owners - all backed by industry-leading training and support. Whether you're new to franchising or looking to expand your portfolio, Neighborly’s diverse lineup offers a unique opportunity to grow a business with both potential and purpose.
