A franchise business is one where a business owner (the franchisor) permits another (the franchisee business) to use the name and know how of the franchisor. In return, the franchisee pays franchise fees to the franchisor who controls the activities of the franchisee through a detailed franchise agreement.
By setting up a franchise business it should enable your business to grow and increase brand recognition at low cost. The franchisee gains by having a head start in setting up their business on the back of your business name, successful business formula and ongoing support.
Through this series of news items we will consider the 10 steps (legal and practical) you should factor in when deciding whether to set up a franchise business.
Ten steps if thinking of franchising your business
No matter what type of business you operate it can probably be franchised and in theory you could franchise your business regardless of your business success. But common sense and good business practice says you should not be setting up a franchise business and selling franchises unless you have a proven business formula which is transferable to franchisees. In any event, you need to be able to sell the franchise to prospective franchisees by demonstrating your success.
So, Step 1, before embarking on franchising your business make an honest assessment as to whether you have a well run, successful business with a proven track record which can be packaged and sold to would be franchisees.
Step 2 to follow soon…
Lathams can provide franchising legal advice. We are happy to have an initial chat about ‘what is a franchise business’ on a free, no obligation basis.