How To Franchise a Great Business Idea

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Jul 15, 2021

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Deciding to create a franchise is a great way to expand your business because 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.

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.”  Doing your homework first will save you a lot of time, effort, advertising, and legal fees 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, you should subject your concept to a careful feasibility study to see if the business you have makes sense as a franchise concept.

Other considerations come into play: is there a large market for my business? Many great business ideas are not suited for a large market. You should determine if your idea is, or could be, a commonly desirable good or service. Furthermore, determine if there is something about your business that is unique so that potential customers are attracted to your product.

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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 difficult 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, training could be difficult.

Once you have determined that your business is marketable, and 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? Is it a business that can make a profit so your annual royalty fee can be paid? While you may have a marketable business, that does not necessarily mean that you will have a marketable franchise.

Making Your Franchise Marketable

To make your franchise marketable, your business should be profitably operating and have a strong team of employees. These elements are crucial because someone will not want to invest in an untested concept. A potential franchisee should be able to see the value of your business. They should be able to see a business in which will be worth investing their time and capital.

Getting Help with Your Franchise

Once you are convinced franchising does make sense, 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 the key states in which the franchise would be offered or before you start to sell the franchises.

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