I have a great business idea. Can I franchise it?
A franchise idea is a great way to expand your business, as it is an opportunity to get your idea out there without having to assume the risks and come up with the capital on your own. When you franchise a business, the franchisee pays the franchisor a fee up front. This fee generally covers the right to operate a business under the franchise trademark as well as operation training for the business.
The franchisee then invests the capital, hires the employees, and signs the leases. This relieves the franchisor of most of the risk and burden that comes along with starting a business. However, franchising a business is not the right method of expansion for everyone. You must first determine if your business is “franchisable.” Otherwise, you might spend a lot of time, effort, advertising, and legal fees on franchising when another expansion option may have been the better choice.
Things to Consider Before Franchising Your Business
An owner who wants to franchise should have a passion for management and a strong ambition to grow their business. If you are the type of owner that likes to play a more behind-the-scenes role, franchising your business may not be the right decision for you. Once you have decided that you are the type of owner that will be happy franchising your business, ask yourself: is there a large market for your business? While there are many great business ideas, these ideas are not always suited for a large market. You should determine if your idea is, or could be, a commonly needed or wanted good or service. Further, is there something about your business that is unique, so that potential customers are attracted to your product? The best way to help determine this is to ask a professional because it may be difficult to see the big picture on your own.
Moving Forward with Your Franchise
If you believe that your business idea is both unique and marketable to a large market, you should then determine how easy it will be to train a franchisee to operate a successful duplicate of your business. If there is a lot of specialized knowledge involved or if your business has had the majority of its success because of relationships that you have built over the years, this may not be easily transferable through training.
Once you have determined that your business is marketable, and that that a franchisee will be able to learn how to run your business fairly easily, you should put yourself in the shoes of a potential franchisee. Will a potential investor see the advantages of investing in your business? While you may have a marketable business, this does not necessarily mean that you will have a marketable franchise.
Making Your Franchise Marketable
To make your franchise marketable, your business should be up and running, have a strong team of employees and owners, and be relatively successful, without these elements, it is unlikely that someone will pay for an untested concept. A potential franchisee should be able to see the value of your business. They should be able to see a business that will be worth investing their time and capital in.
Getting Help with Your Franchise
Once you have determined that you and your business are ready to step into the world of franchising, you should contact a franchise law attorney. A franchise law attorney can help you with the intellectual property protections you'll need for your franchise. These protections include trademarks, patents, and trade secrets. A franchise law attorney will also help you make sure you comply with Federal Trade Commission (FTC) laws and the franchising laws of your state
