One way to expand your business in Florida is to franchise your business. Franchising a business works best when it is easy to replicate the primary business. By creating the right to franchise a business, a business owner can expand the profitability of the business. In a franchise agreement, the franchisor offers the franchisee the right to use the knowledge, processes, and trademarks of the business. In exchange, the franchisee pays the franchisor an initial lump sum as well as annual licensing fees.
If you are a Florida business owner and you are interested in franchising your business, BizLaw can help. The process of franchising a business can be challenging. Franchise agreements are typically extremely complex. Making sure that a franchise agreement is well-written and thorough is essential. Contact BizLaw today to schedule your initial consultation with one of our skilled franchise attorneys.
Focus on Your Brand as a Franchisor
As a franchisor, your most valuable asset is your brand. A company’s brand represents its values, culture, and customer service. Take McDonald’s as an example. When people see the golden arches at McDonald’s, they immediately think about burgers and fries, and the entire customer experience of McDonald’s. One of the challenges of offering franchise licenses for your business will be maintaining a consistent brand and positive experience at all franchisee locations.
Successful franchisors create explicit and clear guidelines that franchisees must agree to follow in the franchise agreement. By franchising your business, you are giving other business owners the ability to represent your brand and business. It is wise to monitor franchisee locations to make sure that their social media posts, videos, and advertisements fit with your brand. Make sure that nobody uses the asset that is your brand without your approval.
Hire a Skilled Franchise Attorney
Hiring a skilled Florida franchise lawyer is a crucial step in the franchise process. The attorneys at BizLaw have helped many clients successfully begin the franchise process. One of the first steps in the franchise process is completing a Franchise Disclosure Document. Franchise Disclosure Documents must be submitted in a particular way.
The document must provide potential franchisees with all material information. It needs to include all of the information a franchisee needs to weigh the potential benefits and risks of investing in the franchise. Specifically, it must include 23 specific items of information about other franchisees, franchise officers, and the franchise itself.
The lawyers at BizLaw have an in-depth understanding of franchise laws. We have helped many Florida franchise owners draft thorough and effective Franchise Disclosure Documents. Hiring an attorney to assist with the often tedious process of drafting a disclosure document can help new franchise owners immensely.
Create a Thorough Franchise Agreement
Franchise agreements are incredibly important. Franchise agreements are legally binding contracts between the franchisor and franchisee. The agreement grants the franchisee the right to establish a business that uses the franchisor’s trademarks, operations, manuals, and supply sources. The franchise agreement specifies exactly which intellectual property the franchisee has a right to use. In other words, the franchise agreement defines the relationship between the franchisor and the franchisee.
Franchise agreements should include all of the important aspects of the franchise relationship. First, the franchise agreement should state the term of the franchise. Many franchise agreements last for a time period of 10 years. The franchise agreement should also include the following provisions:
- The franchisee’s requirement to establish a franchise location within a designated time
- The initial training provided to the franchisee prior to opening
- The obligation for ongoing training that may be required or offered by the franchisor
- The territory in which the franchisee can locate his or her business
- The operating procedures that the franchisee must follow
- The initial fees that the franchisee must provide to the franchisor
- Any on-going fees that the franchisee must pray the franchisor on a regular basis
- Marketing fees or the requirement to pay into a “brand development fund”
- Any non-compete agreements
- Any restrictive covenants
- The state laws that will govern the franchise agreements
As a franchise owner, your brand is extremely important to the success of your franchise business. Spend some time thinking about the marketing arrangement you will have with your franchisees. Will you grant franchisees the ability to contribute to marketing issues? Will they be able to engage in local marketing efforts? A thorough franchise agreement can limit the potential for disputes.
Negotiate Your Franchise Agreement for Your Benefit
Negotiating franchise agreements is a common practice in Florida. However, most franchisors seek to maintain uniformity throughout all of their franchise locations. Many franchisors will not negotiate on branding issues or operating procedures. Additionally, franchisors often will not modify or negotiate regarding initial franchise fees and ongoing royalty payment amounts.
Other aspects of franchise agreements can be negotiated. For example, the territory agreed to in the franchise agreement can be negotiated. A franchisee can often negotiate the overall geographic boundaries of the franchise agreement. The number of distribution channels, the location of the customers, and the penalties for violating the franchise agreement can also be negotiated.
Negotiate the Process for Dispute Resolutions
It is difficult to anticipate the problems that might arise between the franchisor and franchisee. Many franchise agreements contain a provision regarding dispute resolutions. However, the provision may not be favorable for the franchisor. Before creating the agreement, consider how you would like to resolve disputes with your franchisee locations.
Keep in mind that as your business expands, you could have franchisee locations in many different geographic locations. Franchise agreements will often require mediation as a first step in the alternative dispute resolution process. Binding arbitration in a setting that is fair to both parties is often a next step in the dispute resolution process.
Our Franchise Agreement Attorneys can Help
Starting a franchise in Florida is an exciting and daunting process. You do not need to go through the process alone. The BizLaw attorneys can help you throughout the entire franchise process. We assist our clients in creating thorough and complete franchise agreements. Contact our law firm today to schedule your initial consultation.