Legal basics and more for franchising your business

Dec 13, 2019 | Small Business Tips

Ready to expand your business? Franchising is one of the best ways to grow your company. Here is our quick start guide to becoming a franchisor.

1. Evaluate your business

First, look at your sales and profit.  You should have at least two or three business units that could demonstrate your business sustainability. Additionally, take into consideration the following aspects:

  • The attractiveness of your business concept to potential franchisees and the final consumers;
  • Solid market research that proves the widespread consumer demand in the areas where you would like to expand;
  • Your personal and professional readiness to run franchises, and take the next step from business owner to franchisor.
2. Meet all legal requirements
To legally sell franchises, you must successfully register a Franchise Disclosure Document (FDD) with the Federal Trade Commission. Besides the federal requirements, you also have to follow the states’ rules for selling franchises within their borders.  At this point, you will need to provide certain information about your business and plans, such as audited financial statements, your management team’s business experience, an operating manual for franchisees, etc.  Consult with our experts about your franchise ideas, and we will identify and help you to prepare all the necessary documents.


3. Decide on the franchise model
Now it is the moment to make key decisions about how you will operate as a franchisor. These might include:
  • The locations where you want to expand;
  • The franchise fee and commissions;
  • The required business experience and the net worth franchisees need;
  • The terms and the duration of the franchise agreement;
  • The support you will provide to franchises.

Our lawyers are here to walk you through all the decisions you need to make in order to successfully franchise your business.


4. Get your team ready
Usually, you will need to add several staff members to help you in the process of becoming a franchisor. They will also play a key role in the development of the support system you will set for your franchises. In the future, this team could also be in charge of supporting the franchises on a daily basis.


5. Screen your franchisees
As a business owner, you know that enthusiasm is not enough to run a company. The franchisees will represent your brand, and will contribute to your business growth. Thus, they need to be the kind of entrepreneurs you consider perfect for your business concept.
  • Decide on your selection criteria;
  • Make a list with the details you need from the prospects;
  • Select those that fit your business profile.
6. Sell the franchises
You are ready to promote your business as a franchisor! You need to find potential franchisees and convince them to buy your business concept. Before any negotiation, consult with our attorneys. Selling one or multiple franchises is not the end point. You will have to support and monitor your franchise network to keep your business growing.


Contact our attorneys and schedule a free consultation to create your franchise!

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