Franchise
12. Establishing a Franchise
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 27 Jul 2015
- Successful business owners may want to expand their current operations and to consider the development of a franchise to help them do so.
- Becoming a franchisor can be an exciting time for a successful business owner. However it is important to note that running a successful business and creating a franchise out of that business can require two completely different skills sets and will carry very different risks.
- Before making the leap into franchise operations there are a number of important elements to consider.
- To decide whether you and your business are suitable and ready for the establishment of a franchise you should consider the following:
- does your business operate successfully and have a proven positive cash flow?
- can your business operations and procedures be easily systemised, replicated and adapted to other locations or contexts?
- is your business concept profitable enough to generate sufficient income from your franchisees?
- have you got a unique trademark or other intellectual property that provides strong identification with your brand and business?
- is your business success consistent and sustainable?
- do you have a strong goal to grow and expand your business?
- do you have the capital to invest in the development of a franchise plan and to assume the risk associated with additional capital investment of a franchisee?
- If you believe your business is suitable for a franchise you should seek legal advice before you proceed. Establishing a franchise is:
- complex;
- risky;
- expensive; and
- can take a very long time to set up.
- Engaging a lawyer can save you time, money and risk by assisting you in the early and ongoing phases of developing a franchise. Our free Find a Lawyer directory may help you get in touch with an experienced franchise lawyer near you.
- Some of the main tasks with which a franchise lawyer can assist include:
- developing operational manuals;
- understanding any compliance requirements applicable to any new locations;
- leasing premises;
- establishing supply arrangements and negotiating costs for these; and
- drafting franchise agreements.
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