Anyone who owns a business and is thinking about turning it into a franchise needs to understand the kinds of challenges they’ll be facing. As a franchisor, you must understand the laws, rules and regulations that affect you and your franchisees.
In order to have that understanding, you want two things: perspective on the issue and proper legal representation. With both of those on your side, you’ll have a much better chance of making sure your franchise system flourishes. When launching your own franchise business, have a results-oriented approach to common challenges you will face.
Consider That Second Location
A lot of business owners think they need to open a second location first so they can prove that a franchise would be successful. If you do that, though, you end up with more liability and time investment. Instead, utilize your current location and the services of a qualified attorney with experience in franchise law. That can be enough of a learning experience to help you get ready for the launch of your franchise system.
Many Aren’t Ready for the Liability
Franchisors have to be sure they are ready for the liability issues that can come with running a franchise, especially as it grows and expands. More franchisees require stronger negotiation skills, more business acumen and other significant factors are needed. You can’t always anticipate everything, but the more prepared you are, the safer you will be financially and professionally. Whatever skill sets you lack or don’t enjoy doing are being covered by a third party. Your franchise counselor can help you achieve that.
Understanding the Business Demographics
Demographics are extremely important to any franchise operation. If there aren’t enough people coming to the location, or if it’s in a bad area where businesses are frequently unsuccessful, your franchisees may not see any value in working with you. That could lead them toward another company’s franchise opportunities and leave you struggling to expand. With a clear understanding of demographics and location, you will be able to avoid those types of issues more easily.
Expansion Must Be Well Understood
Expanding your business into a franchise means a good analysis of what you really intend to do. Working with an attorney knowledgeable in franchise law is a big part of that, as is financial understanding. There is much more to the franchise business than many owners assume, and when they start getting franchisee interest they are uncertain as to how to move forward successfully.
Cash Flow is a Killer
Expanding your business into a franchise system can be very expensive. The average attorney charges $60,000 to $90,000 up front for just the beginning legal documents called the Franchise Disclosure Document (FDD). The entrepreneur attorneys at Shelton Law & Associates recognize that spending all your savings up front does not make business sense. Contact Shelton Law today about how to start your franchise system with their team building payment plan.
Infrastructure Takes Time
Developing a business into one that can have a strong infrastructure capable of supporting a franchise is not easy. It’s also not terribly fast, and that has to be acknowledged in order to advance. When business owners get impatient or they focus on trying to move things forward too quickly, they can struggle because they are actually unprepared for what they are trying to do. By planning for a longer period of creation and expansion, those who start a franchise will generally have more success. As a franchisor, you will continually work on the infrastructure to keep improving it.
To make sure you get your franchise off to a good start, contact Sheltonpower & Associates and make an appointment with one of our attorneys. We can walk you through the basics of franchisor startup and answer any questions you may have about turning your business into a franchise.