Franchising Your Business and the Law
Expanding an international or domestic business
By franchising your system to another party, you take advantage of an extremely adaptable method of distributing products and services and promoting rapid development of your system, while spreading its risks and costs. The Johnson Franchise Law Firm represents a wide range of businesses from large-scale multinational franchisors to companies first considering franchising. Founded by an attorney who left a partnership at an international law firm to found his own firm, The Johnson Franchise Law Firm has the same entrepreneurial spirit as its clients.
Considerations of opening a franchise
To be successful, a franchisor must first sell franchises. Then, the franchisees must sell the products or services. A business has to be right for franchising — prospective franchisees must find it an attractive opportunity, and consumers must want the product offered by the franchisee. There are some additional considerations, including:
- Will others pay to learn the proprietary business?
- Is the business easily adaptable to other markets?
- Does the franchise have a profit margin that allows a franchisee a reasonable return on investment (even after paying royalties)?
- Can franchising help divert customers away a competing business?
After deciding to move forward and franchise its business, the franchisor recruits franchisees — someone who wants to replicate the franchisor’s business in another market — and executes a franchise agreement and related agreements with that franchisee. The franchise agreement usually licenses the franchisee the right to use the franchisor’s business name, branding, and business model for a flat price and a royalty. The related agreements give the franchisee the right to develop other franchised businesses, and protect the franchisor’s intellectual property – generally its confidential information and trade secrets. The franchisee supplies the capital to open the franchised business and assumes responsibility for the business. The franchisee keeps most of the profits.
Globalization invites expansion and franchising around the world
Fifteen years ago, relatively few franchisors operated worldwide — typically only large franchisors expanded into other countries. But now even small companies are looking internationally. In early 2013, 34 percent of the franchise units operated by the top 200 franchisors in the United States were located outside of the United States.
Franchising lends itself to easy replication and offers good opportunities in emerging economies and markets. Franchising comes naturally to many experienced entrepreneurs, and the businesses provide not only jobs, but also learning opportunities. Rich Johnson of The Johnson Franchise Law Firm has guided franchisors from international jurisdictions to open successful operations in the United States for 20 years and is now helping U.S. businesses lead the way in international franchise development.
Call The Johnson Franchise Law Firm today for experienced franchise legal counsel
The Johnson Franchise Law Firm can take your business to the next level through domestic or international franchise development. Contact the firm online or at 770-529-2762.