Taking the option of franchising can be a positive move, however it is a move that is not suited to every type of business.
This article looks at some of the things you should definitely think about when considering going into a deal as a franchisee; if you have questions or are confused, your franchising solicitors will be able to provide you with more information.
Costs and financing
As any franchise solicitor will tell you, one of the most important issues you need to consider with any business deal is how much it costs and how you are going to pay for it. When you are thinking of becoming a franchisee, you need to know where your financing is going to come from as it is more than likely you will have to buy in to the agreement. This could be more than 45,000 depending on the business, so it is definitely something to consider.
As well as the initial start-up costs, you also need to think about your long-term running costs as you need to know you will be able to make ends meet while you get everything up and running, just as you would with any other business.
The franchise itself
You should also think about the company you are planning to make an agreement with. What industry are they in? Do you have experience in that industry? Does the company have a good reputation? If the company already has franchisees, it can be a good idea to talk to them so you can get a better idea of what it might be like if you decide to go ahead with an agreement.
Length of the agreement
The length of the contract is another important issue to consider before going ahead with any agreement. Some contracts are relatively short (up to three years, for example), while others lock you in for a decade or more so you should think about what you want before signing anything. Your franchising solicitors will be able to talk you through your options.
Who has control?
What you actually get for your money is important, too, as some franchises offer their subsidiaries more control than others. You need to know who would have financial responsibility for things such as uniforms and training, as well as how much creative discretion you’d be allowed, as some companies are stricter about following precise business plans than others.
Intellectual property advice is another issue it’s worth thinking about as trademarks, training manuals, promotional material and more all fall under this banner and so licenses need to be sorted out for the franchisee. In fact as franchising has sometimes been described as “renting a brand”, issues about branding are critical – so you will need to make sure that you get expert intellectual property advice as part of your legal package from your solicitor. This is something your franchise solicitor will be able to guide you through to make sure you understand what’s happening.