Business & Franchise Lawyers
Since 1996

Call Today for Help
(800) 976-4904
Contact Form

Creating a Franchise System: Why the FDD Preparation Process Matters

Charles Internicola

by Charles Internicola
National Business and Franchise Lawyer

Date: 02/05/2014 | Category: Start a Franchise | No comments

Why the FDD Process is Important

Time and again I am reminded of the critical importance of the FDD preparation “process” and why the quality of the FDD preparation “process” will substantively impact the quality of your eventual franchise system.

Defining the FDD Preparation Process

What do I mean by the FDD preparation “process”.  Basically‚ I am referring to the methods and communications by which you either‚ individually‚ or with your management team will be working with your franchise lawyer respecting the preparation of your Franchise Disclosure Documents.  Franchise systems must evolve over a period of time (typically three to six months) require a “process” that examines the assets and core elements of a business‚ the unique factors of the business and‚ both‚ the personal and business goals of the start-up franchisor.  After this evaluation is completed‚ this “process” must then focus on creating a franchise system (structured by way of the FDD and Franchise Agreement) that reflects the business being franchised.

Avoid Generic Franchise Disclosure Documents

Far too often‚ “process” is ignored and many just insist on creating a franchise system and franchise disclosure documents that fit within a rigid framework without flexibility and without recognition and amplification of the unique aspects of the franchised business.  So if you are considering franchising or involved in the preparation of your FDD‚ pay attention to the “process” and question whether or not both you and your franchise lawyer have developed a clear understanding of what your business if (really) about and what your franchise system should look like in the future.  Don’t just accept components of a franchise system just because t”that is how everyone else is doing it”.

FDD Preparation

Some things to consider:
  • What does your protected territory look like?
  • Royalty structures need not be based on a “fixed” percentage of gross sales.
  • How important is social media to your business?
  • How will your FDD and Franchise Agreement deal with web procurement and distribution of products and services.
  • Must every franchise unit conform to uniformity requirements or can you “localize” and “individualize” franchised units?]
There are many other things to consider but‚ the most important‚ is to know that you must actively participate in a partnership with your franchise lawyer to ensure that your franchise system is as unique as your business.  By the way – if you don’t think that your business is unique then you have either not properly evaluated your business or‚ quite possibly‚ your may not be ready to start a franchise.

How to Expand and Protect Your Business Through Franchising

To learn more about the franchising process request a complimentary copy of our “How to Expand and Protect Your Business Through Franchising” Magazine.

Related Articles:

Leave a Reply: