If you have a great concept and method that you have tested for a few years in your own stores or restaurants, you might be thinking you should franchise your concept, and maybe you are right. But you may also be wondering why franchise your business.
Franchising has many advantages. The most important reason to franchise your business is rapid growth with minimal capital investment and risk on the part of the franchisor. The franchisee makes the initial investment at the unit level and takes on most of the risk.
Also, the franchisee takes on most of the business risk with respect to liabilities and debts. While you, as a franchisor, are responsible for providing support, supervision, and training, you’ll collect recurrent fees, such as royalties, franchise fees, and marketing fees with minimal involvement in the business and close to zero liabilities. The franchisee will be responsible for the lease, contracts with vendors and employees, as well as the operational work at the unit level.
After you franchise your business, your goals as a franchisor are aligned with the goals of the franchisee. Your common goal is the profitability of the franchise unit. But since the franchisee’s investment is at stake, likely you’ll have a motivated business owner who is willing to help grow his business, which will in turn make your company and brand grow.
Also, when you franchise your business, you will save time and resources that it takes to open one store at a time by having your franchisees open units for you. Franchisees will be spending their time and resources searching for the best location, doing construction and design, hiring and training employees.
Additionally, when you franchise your business, as opposed to license it, you get significant control and supervision over the franchisee’s use of your brand.
Contact us today if you are considering whether to franchise your business.
Before you franchise your business, you’ll want to make sure that you have a tested product or service. Of course, there is no specific rule or legal requirement about when to franchise your business in the U.S. Generally, Miami Franchise Lawyers recommend having at least a couple of profitable corporate-owned stores or units for at least a few years to understand the economic cycles of your industry before you begin to franchise your business.
Miami Franchise Lawyer Isabel Yague always recommends her clients to make sure they understand and know their product, target market, and competition very well. Nothing will give you a better insight into your industry than actually running your own units for a while.
Additionally, you should be able to easily replicate or reproduce your product or service without your personal involvement. Furthermore, Miami Franchise Lawyers recommend you develop good operations and training manuals describing all your processes and methods, because you’ll be training your franchisees and employees in the ins and outs of every aspect of the product or service you are selling.
Besides, your product should be unique or have some component of uniqueness to compete well in today’s ever-changing market. On the other hand, according to Miami franchise lawyer Isabel Yague, you don’t need to have a product or service which is completely new. It is enough if the product merely has some special feature differentiating it from the competition.
Another factor to consider when deciding to franchise your business is the territorial scope of sales of your franchise concept. In order words, you should determine whether your product can be sold at a national level or on a more local basis. Your franchise model will depend on this decision. You’ll need to gather market research data and evaluate your competition to ensure that there is enough demand for your product or service, as well as the territorial scope of such demand.
Moreover, your product or service should produce a good return on investment to keep franchisees happy and engaged in the business. So, make sure that your concept is a profitable one before franchising it!
Once you are certain that you have a good solid product that meets these recommendations, you made an expansion plan and decided on the elements of your franchise model, it’s time to get experienced Miami franchise lawyer Isabel Yague to guide you through the process of franchising.
Franchising is a highly regulated area of law. Federal law applies to the sale of franchises. Additionally, some states have created statutes that apply to the sale of franchises.
To get to a point when you can start selling your franchises is long process that requires significant initial investment. But if your brand is successful, the monetary return could be very substantial.
Once you made a decision to franchise your business, you need to choose your franchise model, which would include all the economic terms of the franchise, as well as your franchise expansion model.
Before you start franchising, you must engage services of an experienced franchise attorney who would help you navigate the complex world of franchising legal requirements. Miami franchise lawyer will work closely with you drafting your Franchise Disclosure Document (“FDD”), which is required under Federal law, and the franchise agreement. Some US states require additional registration with their state regulators. Miami franchise attorney Isabel Yague will advise you on local franchise disclosure and registration laws and requirements.
Furthermore, early in the process of franchising, you should hire a CPA who would guide you through the ins and outs of compiling and analyzing your financial data. Additionally, you will need to create a business plan, perform marketing research, and develop operations and training manuals.
Moreover, you will need to set up a good screening process for potential franchisees. Because franchisees are the ones selling your concept, you want to make sure not only that they have the right experience and background but also that their values align with your company’s values.
As part of your franchise development, you will likely need to hire full-time personnel to support and train your franchisees. Managers with franchise operations and marketing background are good candidates for some of the roles you’ll need to fill up early on.
Once you decide to franchise your business, your role as a franchisor will be completely different from a traditional business owner. Therefore, you need to understand and be comfortable with the idea that you’ll be selling franchises and supporting and training franchisees, as opposed to be highly involved in the day-to-day operations of a business. Additionally, while franchising allows you a certain degree of control over your product or service for purposes of protection of your brand image, you will not be involved in every aspect of the implementation of production of your concept, so you need to be comfortable with letting go of complete control.
Once your start selling franchises, one of the most important things to keep in mind is to support your franchisees and keep open channels of communication with them. Miami franchise lawyer Isabel Yague always recommends her franchisor-clients to regularly ask their franchisees for feedback on the company’s methods and policies. After all, when franchisees are motivated, they work much harder towards the common goal of growing your brand.
Lastly, if you decide that franchising is not for you or that you are just not ready yet, keep in mind that there are alternatives which could help you expand your business. Some of these alternatives are joint-ventures, trademark licensing or finding local partners with specific skills or strategic contacts. To franchise your business is an important decision, and the right timing is crucial.