When it comes time to expand your business there are options. The most common options include:
BUSINESS EXPANSION OPTIONS
Organic Expansion - A traditional option, of course, is to simply open a new location. This works for many with the primary advantage being that you control everything that goes on in the business. The downside, however, is also the fact that "you control everything" and will be required to invest more of your own capital and more of your own time to managerial tasks.
Licensing- Licensing is definitely a useful form of expansion but one that requires caution. In terms of "licensing," as a Licensor, you will be granting a third party (known as the licensee) the right to utilize your trademarks and, possibly, your business systems and intellectual property. The benefits being that you will generate additional revenue in the form of a "license fee" and licensing may serve to expand consumer recognition of your brand. The detriment being that you will have to carefully structure your license agreement to ensure that it does not qualify as a franchise. From a legal standpoint license agreements are extremely limited. That is, other than granting a "license" to use certain trademarks and intellectual property you will not be permitted to exert control over your "licensee." Moreover, license agreements in many instances cross the "legal line" and fall within the definition of a franchise. So, a license agreement, if not properly drafted and restricted may, subject you to franchise liability.
Franchise your business- Franchising is a proven business expansion model but one that requires detailed consideration. The benefits being expansion that occurs through the capital and managerial investments by third parties (franchisees) and the additional revenue that they will generate for you in the form of royalties. The detriment being that franchising is a regulated industry that requires consultation with a franchise lawyer and the preparation of a Franchise Disclosure Document (FDD).
The good thing is that there are many vehicles for achieving business expansion. Not all will be right for you and, before making any decision, take the time to explore the facts. Consider both your "personal" goals and your "business" goals.
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and Charles N. Internicola, Esq. and that the information contained on this site does not and cannot serve as a replacement for the competent legal advice of a licensed attorney in your state. Further you acknowledge that any and all citations to cases and statutes must be independently verified by competent legal counsel to confirm the validity and accuracy of such information. The content of this site is subject to the Copyright of its author and owner, Charles N. Internicola, Esq.
