Franchising

David Thomas Azrin

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Franchise Lawyer

Contributor Level 6

Posted almost 5 years ago. 1 helpful vote

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1

Have a proven business model

Before you start selling franchises, you should have substantial experience yourself operating the business. This is important because the franchisee will be looking to you to provide an operating manual, training, and guidance with regard to the products or services, equipment, costs and supplies.

2

Have a name which is protected

One of the elements which the franchisee is buying is the right to use your name. The name should be a "catchy" one, which no one else is using. You should take appropriate steps to protect your right to use the name, by registering the name with the United States Patent and Trademark office. www.uspto.gov.

3

Research and decide on the terms of the franchise

You should research other franchise systems to see the terms which similar franchisors offer, including the initial franchise fee, length of term of agreement, royalties, and training. You will be competing against these other systems to attract qualified franchisees. You can obtain copies of the disclosure documents for other franchisors on the California Division of Corporations website, http://www.corp.ca.gov/SRD/default.asp, or through private clearinghouses, such as www.frandata.com or www.franchisehelp.com

4

Prepare a Franchise Disclosure Document (FDD)

The federal and state franchise laws require that you must provide potential franchisees with a disclosure document which describes everything about the franchise, together with the proposed franchise agreement. In some states, you must register the disclosure document before you begin selling franchises.

5

Make sure you have a qualified staff to train and support franchisees

Another element which you are selling to franchisees is your training and guidance. Before you start selling franchises, you must make sure that you have a training program in place, and the qualified staff in place to provide the training and on-going support to franchisees.

6

Obtain a qualified accountant to prepare audited financial statements

The franchise laws require that you must attach audited financial statements to the disclosure document which you give to potential franchisees. You should obtain a qualified accountant, with experience with franchising, to prepare audited financial statements for your business.

Additional Resources

International Franchise Association

Federal Trade Commission

New York Attorney General

California Division of Corporations

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