You've Signed the Contract. Now What?
By Howard Bassuk

Franchise companies are as diverse in their approach to opening a franchise as they are in their individual concepts. Much depends on where you will be conducting your business, what products or services you offer, whether or not you'll need employees, and so forth.

But even though every franchise company is different in its approach to opening day, there are many similarities. The better franchisors will lead you by the hand through the many milestones that mark the franchise process. "The franchisor should provide you with an almost daily countdown schedule from the time you sign and are approved until the day you open the doors," says Jerry Wilkerson, President of Franchise Recruiters. "Each day you should have an assignment&emdash;a schedule of steps and procedures that leave nothing to chance. Good franchisors have this and, because of their past experience, know exactly what must come together and when.

What kinds of steps and procedures? Again, the methodology differs from each franchise company but there are some standards. "The franchisor should give you a complete checklist prior to training," says Howard Bassuk, founder and President of FranNet, a group of franchise consultants. "The checklist generally includes such tasks as securing business licenses and permits, obtaining business insurance, establishing a location, negotiating the lease, buying equipment and furniture, setting up bank accounts and legal entities, pre-marketing, and initiating certain contacts." While this may appear daunting, remember that the checklists should be specific so there will be no guessing at what type of insurance is needed or what type of permits are required.

Bassuk likens the franchise process to the Army&emdash;with a "hurry up and wait" system. It might seem as though there is a period of time without much to do but the franchise process moves quite rapidly after training. "It's a terrific time to establish contacts and take care of details that can fall between the cracks later on," advises Bassuk.

Site Selection

The biggest decision that has to be made is site selection. "Good franchisors always help with the real estate site location analysis and direct assistance," says Wilkerson. "They also should provide lease negotiation help and common rules that will help franchisees with this all-important aspect of franchising." Expect the franchisor to take an active role in choosing your site. After all, they will most likely have final approval of your location.

If there is an existing franchisee in your city, the franchisor will most likely have already conducted a site analysis and may have contacts with real estate professionals who can better assist you. If you're the first in your area, you'll have little ground work to do but never fear&emdash;the franchisor should guide you through the process. Start by visiting real estate offices, learning what is available, study rent levels, and interview other tenants in the likelihood that a similar business would do well.

Plan on choosing several potential sites for your franchise. Nothing is more discouraging than placing all of your faith in one, single location only to have either the location rejected by the franchisor or to have the entire transaction fall through during escrow. This puts you right back at square one. Save yourself some valuable time and plan accordingly.

Now the Paperwork

The franchisor should provide you with a very specific list of all the licenses, permits, and insurance you'll need before you can open your franchise. The rules for licenses and permits vary from state to state and you should check with the municipalities on what is required. You can turn to other existing franchisees in your same city for advice on which permits and licenses will be required. However, state laws change. Don't assume that the franchisor knows all the laws in your particular area, warns Bassuk. This should become part of the franchisee's responsibility and, therefore, your research.

The franchisor may advise you on which business entity to form&emdash;whether a corporation, partnership, sole proprietorship, S Corporation, or LLC. Your own personal advisor, such as a business attorney or an accountant, should also be consulted.

The franchisor may recommend approved insurance carriers that they frequently work with but most allow you the option of quoting against them. Again, the pre-opening manual will be very specific about what is required.

A Phone Call Away

Always remember that the franchisor is there to help you. They accepted your franchise application and they want you to succeed. No franchise company wants to see its franchisee fail and a good franchisor should always be available and willing to help you at the drop of a hat.

Unfortunately, not everyone views this support the same way. According to Bassuk, some new franchisees feel that they're back in kindergarten&emdash;where all their activities are closely monitored and they feel smothered by the unwanted attention. Other new franchisees boast about the tremendous support they receive from headquarters, how they're just a phone call away. And still others complain that they never hear from their corporate office. "This just illustrates how different people like different things," explains Bassuk. "The key is to find the franchise company you feel compatible with and offers you the kind of attention you feel you need."

Franchisee Support

You can turn to other franchisees in your area for a sense of what you can expect. This will vary by system and depend on who is in your immediate area. But while Bassuk admits this is helpful, he warns potential franchises. "If your first contact is with other franchisees," says Bassuk; "it may create an impression that you don't have to do it the franchisor's way. There's a tendency to compare yourself to other franchisees.

"If you want to seek out other franchisees, spend time with other successful franchisees," advises Bassuk. "In every business there should be a goal. And if there are people who have reached it, seek them out."

Bassuk also advises new franchisees to take the time to explore the technologies that some franchise companies offer. Some franchisors will grant immediate access to their Intranets, where new franchisees can view electronic procedure manuals, access bulletin boards, and gather information that will be useful prior to your opening day.

Now I'm an Expert

Some franchise owners buy with their hearts and not with their heads, warns Bassuk. Once they buy a franchise, they go into a self-delusional stage where they believe that they now know more than the franchisor. If it is an established franchise, you are doing yourself a disservice. You bought a franchise because of what you didn't know and because of what you could add to the system.

Bassuk tells the true story of a client who bought a particular franchise. When Bassuk called to follow up on his progress, the franchisee complained, "This is going terribly! Everything is going wrong and I'm not so sure this was such a great idea." A couple of weeks later, Bassuk timorously followed up on the franchisee again. "I'm ready to give up!" he cried. After a month had passed, Bassuk decided to call the franchisee one more time. "This is great!" the franchisee exclaimed. "Business is doing fabulously. I'm making all this money. This is the greatest thing that ever happened to me!" "What changed?" asked Bassuk. "I really felt I had hit bottom," said the franchisee. "So I finally decided to do what the franchisor told me to do!"

Howard Bassuk is Founder and President of FranNet, the nation's largest group of franchise consultants. FranNet helps people find the right franchise, assists companies in becoming franchisors, and consults with franchisors on upgrading their sales systems.