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Is Franchising a Good Idea?

Understanding How Franchising Works

Yes‚ but the answer will‚ ultimately‚ depend on your business‚ your business goals and your personal goals. First‚ lets be clear and understand that “franchising” is‚ indeed a proven business expansion model. Franchising is a legally recognized (and regulated) business model that permits a successful business owner to achieve the multi-unit expansion of his or her business.

As a franchisor you will take what has worked for you – the marks that you use to identify your business‚ the methods that you utilize for operating your business and the unique products and services that you offer through your business – and create formal “business systems” that you will teach to future franchisees who will‚ hopefully‚ replicate the success of your business.

The answer to your franchising question has a lot to do with you.

So‚ start off with an honest assessment of your business:

  • whether or not your business has a successful track record;
  • whether or not you have developed “systems” that may be taught to franchisees;
  • whether or not you believe that your franchisees will be profitable; and
  • whether or not you are looking to expand your business.

It is also important to understand that franchising is a regulated industry and to successfully establish a franchise system‚ you must comply with federal and state franchise laws‚ starting with the preparation of a franchise disclosure document (“FDD”). However‚ if done correctly‚ satisfying your legal obligations – including the preparation of your FDD can prove to be a tremendous opportunity for refining your business systems.

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FDD Item 23: Receipts

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  1. FDD Item 22: Contracts

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  2. FDD Item 20: Outlets and Franchisee Information

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  3. FDD Item 18: Public Figures

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  4. FDD Item 17: Renewal, Termination, Transfer and Dispute Resolution

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