By Gary Prenevost
If you have recently signed your franchise agreement, congratulations on making such an important decision! Now it is time to navigate a myriad of tasks that need to be considered when your new business enters and progresses through its launch phase.
On the other hand, if you are considering buying a franchise in the near future but have not yet signed an agreement, it is a good idea to become aware of the road that lies ahead of you, particularly as there are additional areas you may wish to research further.
Between signing your franchise agreement and opening the doors to your new business, there is a tremendous amount of detailed work to take care of during the pre-launch period. Strengths in project planning and multitasking will prove vital.
It is important to regularly monitor the progress of and inspect the work that needs to get done during this phase. If any challenges or problems arise, you want to be on top of them as fast as possible.
It is also absolutely important to follow the franchisor’s instructions and guidelines, which will include a ‘to do’ list for the first few weeks. Some of these tasks will not take a lot of your time, but will involve processing time for other parties, so it is best to get them out of the way early.
Most of today’s franchisees incorporate their business from the start. You should seek advice from a chartered accountant (CA) to ensure you can create the optimal share structure (i.e. the number of classes of shares for spousal/family income splitting, distribution, etc.) in the context of taxes. This is the time to understand the long-term tax strategies typical of your type of business.
While incorporating carries a cost and the tax strategies do not kick in right away, one of the primary reasons franchisees choose to follow this path immediately is the liability protection offered through incorporation.
You will also want to contact a lawyer, to help ensure all legal requirements are satisfied. It is important to check what permits are required, for example, at the municipal, provincial and/or federal level before you get started. Some businesses can operate after simply paying for a permit, but other franchisees need to go through months of training to achieve specific certification. There are many examples of people who wanted to open a business but were needlessly delayed because they failed to check on and satisfy proper licensing procedures.
A general insurance agent can help start the application process for whatever coverage the franchisor requires. As there are numerous insurance program providers for small business owners, the market is competitive and plans covering areas like health, dental care and critical illnesses are affordable. ‘Key person’ insurance is also recommended, so your family is protected should anything happen to you while your business is still in its development phase.
In most cases, you should establish the right bank account structure—i.e. operating fund, savings account, commercial line of credit, debit/credit card payment processing, etc.—early in the pre-launch phase for your franchise. It should not take a lot of time; while the bank is handling things at its end, you can start focusing on other tasks.