SME Advisory

How to start a Franchise in Nigeria


According to Investopedia, A franchise is a type of license that a party (franchisee) acquires to allow them to have access to a business’s (franchisor) proprietary knowledge, processes, and trademarks in order to allow the party to sell a product or provide a service under the business’s name. In exchange for gaining the franchise, the franchisee usually pays the franchisor an initial start-up and annual licensing fees.

Franchising occurs when a business wants to increase its shares or expand its geographical outreach to customers thereby increasing the profit of the business.  Acquiring a franchise give you the following

  • The business or brand name
  • The system of doing business
  • The operations manual
  • Marketing materials
  • Trademarks
  • Software
  • All other proprietary material

Popular franchise opportunities in Nigeria includes the following business sectors:

  • Petroleum: NNPC, OANDO
  • Restaurant: Sweet sensation, Domino Pizzas, KFC, United Africa Company of Nigeria (UAC).
  • Transport: ABC transport
  • Movies: Silverbird cinemas, ozone cinemas
  • Logistics: DHL, UPS
  • Interior Design: Nobel carpets
  • Mobile devices: Tecno, Iphone, Infinix

The merits of getting a Franchise include starting a business using a brand that is known all over the country which will cut down your costs of advertising or marketing. You will have the support of the Franchisor, who will provide you with business advice, training, and advertising to make sure you succeed.

While the demits include the substantial cost of getting a franchise, other fees, royalty payments, hiring staff, high cost of leasing a shop and buying equipment, inventory, obtaining business licenses, and insurance.


The following are the guidelines and procedures on how to start a franchise in Nigeria:

  • Select a franchise of your choice that suits your objectives

The first step you should take when starting your franchise in Nigeria is selecting a franchise that suits your competency and objectives. You should select a franchise from any business sector where you will thrive and also where your strengths are more. You will need to align your business goals with the purchase of the franchise in order to make the acquisition relevant.

  • Research on the franchise opportunities and marketing conditions

The next step for you to take is to make through research on the franchise opportunities that are open to you and the favourable or unfavourable marketing conditions that comes with them. You will need to get research information from various sources in order to cement your choice.

Your research questions will consist of questions like

  1. What is the level of experience the Franchisor has?
  2. What is the starting cost and running cost of the Franchise?
  3. What is the duration it takes to start making a profit on the Franchise?
  4. What kind of support does the Franchisor offer their franchisees?
  5. Is the business in debt?
  6. What are my disadvantages?

Getting the answer to this questions will allow you to decide if the Franchise you are interested in joining is the right one for you

  • Write a business plan

After selecting the franchise of your choice, the next step for you to take is to develop a business plan for your business. A business plan will enable know the estimated amount needed for starting the business, sources of funding, equipment to buy, number of employees to hire and other relevant information. The business plan can also be used as a business proposal to those willing to finance your business. A well detailed plan will consist of the following:

  1. Executive summary (This will be done after the plan is written)
  • Business Overview
  • Market Overview: The Opportunity & Solution
  • Competition
  • Financial Highlights
  • Our Ask
  1. The company overview

This is the introduction and description of your company. It covers the following details

  • Mission and vision
  • Overview of company history/capabilities
  • Product description and present stage of development
  • Competitive advantage (what’s different or better than competition)
  • Past customers and performance (if applicable)
  • Legal entity, hours of operation, location description and attributes
  • Structure & Ownership
  • Management Team
  • Intellectual property status (if applicable)
  • Commercialization strategies (if applicable – time frame and actions to move from idea to marketplace
  1. Product and services

This covers the following:

  • Definition of Products or Services to be Sold
  • Product Viability
  • Technology
  1. Industry analysis, market analysis and marketing strategy
  2. Swot analysis
  3. Market analysis
  • Market size(Estimate of the total market size for the product or service and trends
  • Quantification of the size of each market segment in terms of (Naira spent, units used, number of people, percent of income etc.)
  • Competition to the business
  • Market Segmentation and Demographics
  • Customer Profile(Actual and potential purchasers of product or services by market segments)
  • Barriers to Entry
  1. Marketing/sales plan
  2. Management and operations
  3. Summary of risks involved
  4. Professional and advisors
  5. Financials
  • Cash flow projection and/or existing (3 years) with break even analysis
  • Income/Expense projection and/or existing (3 years with ratios and benchmarks to industry)
  • Sources and uses of funds (funds needed, owner equity, how funds will be used/start-up cost analysis
  1. Funding
  • Amount of Money Sought
  • Use of Proceeds
  1. Project implementation schedule if any
  • Review and sign the Franchise contract agreement

When dealing with acquiring a franchise, you will be made to sign a contract agreement with the franchisor (the business trademark you are purchasing). You must thoroughly review the contract by go through the terms and conditions ensuring that your requests are aligned with what is stated in the contract. Reviewing the contract is critical to your success or failure in the business, you must also let your Lawyer go through the document before you sign it. Learn about your rights and obligations and all the essential terms of the agreement.

  • Get the required permits and licenses

Depending on the type of franchise you are purchasing, whether it is a hotel or food or transport, you will need to get the required permits and licenses for you to start your business. Permits are given by the local or state governments. The business license will also require you to register for tax and acquire a Tax Identification Number (TIN) for your business. Failure to get the necessary permits or license will result in fines and penalties by the government authority

  • Choose a business type to incorporate your acquisition

You could incorporate the purchase of a franchise either as a sole proprietorship or a limited liability company. You can register with the Corporate Affairs Commission (CAC) in Nigeria. This will ensure that your business is treated as a separate legal entity different from its owners.

  • Obtain funding

Raising capital for your company is very important as it is one of the first things that you should do as a business owner. Without proper funding, your business may cease to exist. . As a business owner who wants to start a franchise in Nigeria, you could obtain funding through the following:

  1. Self-financing: This has to do with the capital provided by the owner of the business
  2. Grants from government agencies: Various grants can also be gotten from the programs run by the state government or federal government
  3. Loans from banks: Having a detailed business plan and registering your business name will enable you access various bank loans
  4. Investors: Investors who have gone through your business plan and are assured that your furniture making business is profitable can invest millions of naira in your business
  5. Family and friends: Finance can also be gotten from families and friends that are willing to support your business
  6. Venture capital : This is provided to companies that have a high growth potential
  • Purchase the necessary equipment

Depending on the type of franchise you are purchasing, you will definitely need certain machinery, equipment and tools to run it.  Take for example if you are acquiring a restaurant franchise, you will need various kitchen equipment such as Gas cooker, oven, deep freezers, grills, mixers, dishwashers, microwave, blenders etc.

  • Acquire a space or office

Depending on the franchise establishment you are purchasing, you will need to acquire a location that will be easily accessible by your customers and where your administrative duties will also be carried out. These are some of the factors that you should consider before choosing a location for your used car dealership shop;

  1. The demography of the location
  2. Size of the space acquired
  3. The purchasing power of the residence of the location
  4. Accessibility of the location
  5. The local laws and regulations in the community or the state where your business is located
  6. Traffic, parking and security
  • Employ staffs

The next step to take is to hire employees that will aid the growth of your business. This step could make or break your business, this is why you will need to consider those that are experienced. The employees you will hire will depend on the type of franchise you are purchasing

. Personnel can be gotten through

  1. Posting about the vacancy on your website and across any social media or email marketing channels
  2. Asking your business network, as well as friends and family if they know anyone suitable
  3. Adding the vacancy to general recruitment websites
  4. Advertising the vacancy in industry trade media or local newspapers
  • Launch your new franchise

The final step for you to take is to open your franchise business to the public. The Franchisor will also engage in massive advertising campaigns to let the public know that your franchise is ready and open for business


Starting a business from the scratch or foundation is not easy because it takes time before the business is well known and trusted. A franchise allows you adopt a prototype or a brand for you start running your business.  Purchasing a business franchise instead of starting a new business will give you the head start because it saves you time and money that will used in starting a business from the scratch.For more information on how to start a franchise in Nigeria, contact us on 08023200801, 08075765799, Email:

About the author

Onamakinde Dare Daniel is a highly motivated accountant with knowledge in Accounting, Taxation, Management, Audit, Costing and Research. He is keen on tax matters due to its ever dynamic nature.

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