How to start a franchise in Nigeria: Steps


A franchise is an authorisation granted to a individual or business to sell the products or services of a business for a given time in a specific area.

To acquire a franchise, a reputable corporation must be paid money to use its name, brand and trademark to run a business.

Many individuals want to own their own company but don’t want to start a business right from the start because it’s hard.

A franchise will allow you to own a company which is already profitable and successful under certain conditions.

Terms used in Franchising that you should know

franchisor: The company that gave you its name to use
franchisee: you that rented the name of the company
franchise fee: the money you pay to use the brand

A franchise allows you to lease the name of a popular brand and operate a business according to the culture of the brand, with certain restrictions added apart from paying the franchise fee for renting the brand.

Franchise opportunities to explore in Nigeria


While there are local and foreign franchises for different industries, Nigeria’s most famous foreign franchises are franchises in the hotel, food, and restaurant industry.

There are local franchises in several business industries, including energy, transportation, logistics, education, films, hospitals, and restaurants.

For example, NNPC provides petrol marketing stations, Nobel carpets and Mr. Biggs provide franchise opportunities to entrepreneurs.
Nigeria’s franchise market is estimated to pull in $100 billion in annual revenue.

The global franchises are primarily of U.S., South African, and European origin, and international brand demands continue to expand.

How to start a franchise in Nigeria

Below are the steps to starting your own franchise in Nigeria

1. Make enquires on the advantages and disadvantages of investing in a franchise

The benefits of having a Franchise include starting a company using a brand that is known around the country and has achievement records.

You have the Franchisor’s help, which will include business advice, training and advertisement to ensure you’re successful.

While the drawbacks include the substantial cost of acquiring a franchise, other fees, recruiting employees, high cost of leasing a shop and purchasing equipment, inventory, acquiring business licenses, and insurance coverage.

2. Choose a franchise that best suits your goals and niche

Any of Nigeria’s top foreign franchising opportunities may be right for you. But think about your ability and select a franchise where you have more strengths than your weaknesses.

For various sectors, there are franchises, recognize that and don’t just rush into something because of the profit motive.

Align the franchise with your business goals, and use a franchise purchase to achieve those goals.

3. Pick a business platform where you can either choose a sole proprietorship or an LLC

If you use a limited liability company (LLC) to start your Franchise, you will have legal, tax, and business benefits. For example, you’re separate from your company and your assets are covered by that separation.

If you start a company as a corporation, or LLC, you become more credible.

Franchisors often tend to do business with you than if you were using a sole proprietorship under which you have unlimited liability.

4. Make enquires for franchise opportunities and conditions

Research the local community to find out which businesses in that locality can prosper. Get knowledge from reliable sources of study, and not just depend on instincts.

Get government agency info, such as small business administration (SBA), private consulting companies, local business schools, and universities.

Confirm rating of Franchisor. A franchisor must also have a Legal Disclosure Document. Contact franchisee who left to find out why they quit the Franchisor. Ask questions like:

  • How much experience does the Franchisor have ?
  • What are the Franchise start-up costs and operating costs?
  • What is the time it takes for the Franchise to start making a profit?

5. Create a business plan

If you pass the franchise selection barrier, then you will prepare a document that you can use to sell your new business plan to financiers.

Write a clear business plan to assess the project and get investors and banks ready to apply for financing.

The business plan would also require you to document the whole business, so you know the exact amount you need to start, sources of financing, buying equipment, number of workers to recruit, fees to pay and working capital, and year of break-even.

6. Get the necessary funding

To run a franchise, the high cost of starting the company needs you to have enough capital to start the company. Consider start-up costs, franchise fees and supplies, and working capital, and how to get it.

Check with your local banks to see if you can apply for the small-medium-scale funds issued by Nigeria’s Central Bank and ask family and friends.

The loans range from N50 million to 500 million Naira depending on the franchisor you want. If the lender has collateral and meets certain conditions, you may get a loan.

If you can get capital, then you’re almost ready to launch your franchise with any of Nigeria’s top foreign franchising opportunities.

7. Verify and sign the franchise agreement

Reviewing the contract is vital to your company success or failure, so find out the terms and conditions as you would when you sign a loan agreement.

It requires you and the Franchisor to sign a franchise agreement, so let your lawyer go through the paperwork before you sign it.

Know about your rights and duties, and all of the agreement’s necessary conditions.

8. Meet the business basic performance requirements

Get licenses and permits from state and local government before starting business. The usual business licenses include tax registrations, health permits, and work permits.

Get permits as failure to pay for licenses and permits may result in government fines or worse can result in your franchise being terminated for failing to pay for necessary permits.

In addition, if you are an LLC, submit a copy of your company’s annual audited reports to the Corporate Affairs Commission’s business registrar.

9. Renovate your office space and employ staffs

Lease space for the company to start running. The Franchisor will just send you the blueprints, custom fixtures and opening day signage. You will also recruit employees, and the Franchisor will train you and your team to introduce you to the Franchise community.

10. Open your franchise for business

You will appreciate the Franchisor’s support when you open your Franchise to the public, because they will launch huge promotional campaigns to let the world know your Franchise is open to business. Invite your local Chamber of Commerce, Business networking groups, and let top business community leaders know that you are available.

Komolafe Timileyin is a passionate entrepreneur that loves to solve entrepreneurial issues. He is also a blogger and an upcoming Engineer.

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