Leadership Skills for Entrepreneurs

Starting a franchise business is similar to starting your own business from the ground up. As a franchisee, you have built-in brand awareness and standard ways of doing things.- How To Start A Franchise In Nigeria

Join Our Entrepreneurship Online Course

As an individual location of a larger business, you also have the benefit of a pre-existing customer base. However, there are unintended costs and other things to obtain before you get started.

In this article, we’ll cover everything you need to know. Learn how to start a franchise in just eight simple steps.

What Is a Franchise Business?

A franchise business is a business where the owner grants licenses to licensees to operate the business (sell its products, provide services, and more) at a business location.- How To Start A Franchise In Nigeria

Think of businesses that you’ve seen in multiple cities. Each location is a franchisee with its own management that pays a fee to the franchisor (the owner) to “rent” the brand name.

Here are the main financial elements of starting a franchise:

Franchise purchase fee: This can cost anywhere from $5,000 to $50,000, depending on the license.

Join Our Marketing Online Course

Minimum liquid capital: A generally good idea is to have $50,000 to $60,000 for a service-based business, and $35,000 to $100,000 of liquid capital for a facilities-based business.

Franchise royalties: This is a fee you’ll have to continue to pay to operate your business–the royalty fee can be 4% to 12% of your franchise location’s profits.

Additional expenses: Franchise businesses also have expenses such as sourcing a commercial space (if applicable), staffing, and more.

Why Start a Franchise?

Starting a franchise comes with the benefit of starting a business with pre-existing brand recognition, processes and plans. In many ways, a lot of the work is already done for you with a franchise, however, that doesn’t mean that starting a franchise is easy.

Since franchisees have to pay a portion of their profits to the franchisor, you have to add more costs to whatever your budget projections are.

You’re also beholden to a brand’s standards, which you’re unable to change too much. This lack of control can be hard for entrepreneurial thinkers.

Common Types of Franchises

Food and Drink

The franchise you’ve probably engaged with as a customer the most often is a restaurant or food store. If you have a favorite fast-food restaurant or convenience store to pick up snacks, you might have some fun ideas for a franchise location.

  • McDonald’s
  • KFC
  • Jersey Mike’s

Business Services – How To Start A Franchise In Nigeria

If you’ve been to UPS or any company that lets you get things you need to do business, you’re probably familiar with this kind of franchise business.

  • Express Employment Professionals
  • Real Property Management
  • FastSigns

Health and Fitness

Many successful gyms are franchise businesses. They provide a regular service that people need and can also give a sense of community and consistency for people moving to new cities, especially those that provide group fitness classes.

Healthcare organizations can also be franchises. If you’re interested in providing healthcare services, you can look into companies that provide home nurses or professional consultations.

  • Planet Fitness
  • The Vitamin Shoppe
  • Home Helpers Home Care


Of course, many well-known retail stores across the country are in fact franchises.

  • Edible Arrangements
  • Pet Supplies Plus
  • Apricot Lane Boutique
  • And More

Join Our Communication Skills Online Course

Franchise businesses are common all over the country. Whatever business you’re interested in, you can probably find a franchise that has successfully created a niche in the market.

  • Lapels Dry Cleaning
  • SuperCuts

Franchise Pros and Cons

The great advantage of a franchise is not starting from scratch. You have the branding and design concepts ready to go, and you get to focus on the important operational aspects of the business. – How To Start A Franchise In Nigeria

The franchisor also has existing vendors so you don’t have to research providers and work out contracts with them. In some cases, you won’t be able to choose your own vendor for a franchise business.

However, the con is that you won’t have as much creative control with the business. If you’re invested in designing your own brand identity and taking control of the product design, a franchise might not be the right choice.

How To Start a Franchise in 8 Steps

There are several steps to start a franchise after you decide to pursue this business. From picking to getting a license to securing space, you have to plan this process ahead of time to stick to the franchisor’s standards.

1. Research Franchises – How To Start A Franchise In Nigeria

You can find franchise opportunities on websites like Franchise Direct. It categorizes franchises by industry, working from home, and lower cost ones.

These are the key points to keep in mind when you’re picking a franchise opportunity:

  • Industry fees
  • Liquid capital needed
  • Average monthly/yearly revenue
  • Royalty fees
  • Marketing fees
  • Other fees

2. Evaluate Opportunities

Before you start a franchise business, you should make sure that one doesn’t already exist in the area. Although there are some businesses that can exist throughout a city, such as Dunkin’ Donuts, you want to make sure you’re not setting up a competitive location that could underperform.

3. Evaluate Costs

When you’re looking into starting a franchise business, you’ll have to be on top of a few different costs. In addition to regular business costs such as rent and maintenance, you have to pay a yearly royalty to the franchisor.

Other costs include travel, training with the company and paying some local taxes to start your business.

4. Draft a Business Plan

Even though many aspects of the business are already defined, you’re in charge of the most important aspects of the business. When you write your business plan, you can outline why you would be a strong steward of the business.

It’s also important to explain how you understand the community you wish to serve with your location. You’re the expert and it will be helpful for the franchise overall.

5. Get the Franchise License Agreement

The franchisor has a contract that they provide to franchisees in order to run the business. Before signing, make sure to read it over and understand all of the standards expected of your location.- How To Start A Franchise In Nigeria

It’s important to know what business standards the franchisor has for franchisees, and make sure you’re comfortable with upholding the business.

6. Form a Business Entity

After you write your business plan, it’s time to form an LLC or corporation to get started. Franchisors require different business entities based on their overall structure. Either way, these businesses mean you can start categorizing your business expenses.

7. Choose Your First Business Space

When you have the business operations in place, it’s time to look for a business headquarters. There are probably guidelines from the franchisor about what kind of space you’ll need in terms of size and setup.

If it’s a restaurant, they also probably have specifications about appliances and amenities needed to keep the space in line with the overall brand.

8. Hire Employees

Once you have your agreements and a location in place, you can start looking for employees. The franchisor probably has job descriptions and titles set up already so it’ll be easier to post the job openings and start searching for good employees.

The franchise owners might have an internal job posting system as well, in case there are employees at other franchise locations looking to relocate.

Bottom Line

Starting a franchise business can be just as much work as starting a business from scratch. Working with a franchisor gives you the space to focus on important aspects of the business. The big picture is already completed. – How To Start A Franchise In Nigeria

Do franchise owners make money?

Although franchisors cannot forecast income, as a franchisee, you can definitely make money. It’s important to assess your costs regularly and make sure you’re spending money effectively, like any business owner.

Are franchise fees paid yearly?

Franchise fees are usually on a monthly basis. The fee is a percentage of your revenue, and the royalties can range from 4% to 12% per year.

How much does the average franchise owner earn per year?

In a study from Franchise Direct, the average franchise owner makes $80,000 a year before tax. However, the range of income is quite large: anywhere from $50,000 to $250,000.

What kinds of franchises are available?

In general, there are three types of franchises available: business, management and product distribution. – How To Start A Franchise In Nigeria

A business franchise gives you the rights to a business’s trademarked name as well as its processes and tools for selling products.

This is the most common kind of franchise. A management franchise allows the person to manage the business, but not necessarily have to deal with its day-to-day operations.

A product distribution franchise occurs when a franchisor provides the product, such as clothing, vehicles or drinks, and the franchisee sells them, such as in a store, auto dealership or vending machine.

User Avatar

Rilwan Ajibola

I help business executives enhance productivity, increase sales, and expand their business. You can join my online course, request a consulting service, or book me for corporate training.
WhatsApp: +234 916 6118685

Chat with us on WhatsApp, we're online!