It has been tough, but you have started a successful business. Now that your business is profitable, you are considering starting a Florida franchise business. A franchise is a type of business owned by individuals (the franchisees) but is overseen by a larger company (the franchisor). A franchise is a legal license to use the products, name, and trademarks of an existing business. Franchising their business offers business owners a way to rapidly expand business and increase profits. Franchising a business is not always easy, however. It is important that business owners understand the best practices and challenges they will face when starting a franchise business.
Research the Market Thoroughly
The first step to starting a franchise business is to do your research. Before selling a franchise license, look into the market in your industry. For example, if you own a successful sub sandwich restaurant, research the sub sandwich market. The market may be saturated in Florida, but not in other states. Find out who your most successful competitors will be and analyze what aspects of their franchise businesses stand out as winning strategies. When researching potential franchise locations, consider whether customers in that area will recognize your brand. How far away will other locations need to be to avoid competing with your current business locations?
Develop a Strong Brand and Marketing Strategy Before Franchising
When potential franchisee owners consider buying your location, they will be focused on your branding and marketing. For your franchise business to succeed, franchise locations will need to use branding and marketing that is consistent among all franchise locations. Your most valuable business asset is your brand. When customers and potential customers see your logo and your location, what do they think? Are they inspired by your marketing presence? Do not overlook any detail. In order for franchisee owners to adhere to your brand and marketing standards, they must be clear from the start.
Create a Growth Plan
Do you envision your Florida franchise business as staying within the state of Florida? Or do you envision your franchise business becoming a global brand, such as McDonald’s, KFC, or Pizza Hut? How quickly would you like to expand your franchise business? How many franchisee applicants do you plan on accepting in the first year of your franchise business? Answering these questions will help you create achievable goals when it comes to your franchise business.
Create a Thorough and Effective Franchise Agreement
Your franchise agreement will become an incredibly important legal document. The franchise agreement states the legal obligations of the franchisee and the franchisor. Franchise agreements can be complex and lengthy. Franchise agreements need to be thorough in order to address all of the issues that may come up in the future.
Think of your franchise agreement as a way to protect yourself and your business and to ensure that all franchise locations comply with your branding, high standards, and vision for your franchise business. Franchise agreements need to include the following key terms:
- The time period of the franchise agreement
- The payment schedule for the franchisee
- The amount of the advertising fee, management fee, and the initial sum
- Which trademarks, copyrights, or patents the franchisee will have a right to use
- Ways in which the franchisee may legally use your intellectual property
- Any supplies that the franchisee must legally purchase from you
- The confidentiality of the franchise agreement
- Requirements that the franchisee keep a full set of accounting records
- Any requires for the employees of the franchisee
- Any requirements as to the use of software that you allow the franchisee to use
Be Selective When Choosing Franchisees
Finalizing your franchise agreement and opening your franchise business can be exciting. However, it is important to be selective when choosing your first franchise partners. The due diligence process is one of the most important aspects of starting a franchise business. It is better to wait to find the right franchise owner than to accept a franchise owner who will not do your business justice.
Remember, you will be entering into a legally binding relationship with the partners. Additionally, your franchisee will be able to use your brand, which is one of the most important parts of your business. Only choose franchisees who will accurately and carefully represent your brand according to your goals and vision.
Ask yourself if the franchisee applicant would be able to represent your brand adequately. Many franchise business owners will conduct a background check on franchisee applicants. Consider whether or not the franchisee has enough capital and financial stability to run a business? Write a list of deal-breakers that would bar you from accepting a franchisee. Stick to that list when interviewing franchisee applicants. When possible, conduct multiple interviews to make sure that the franchisee is a good fit. Examine their past business experience to make sure they are a good fit for you.
Offer Support to Your Franchise Locations
The first five years of a business are often the most challenging. Offering support to franchise locations is critically important, especially during the first five years of operation. Be sure to spend time visiting franchise locations and answering questions the owner may have. When a franchise location gets off on the right foot, it is easier to fix smaller problems that might arise down the road. Many franchise owners enjoy it when franchise owners have a way to celebrate victories and milestones. Some franchise businesses offer regional and nationwide conferences aimed at inspiring their franchise locations owners to make and meet new goals.
At BizLaw, We can Help You Start Your Florida Franchise Business
Starting a franchise business in Florida is exciting and challenging. At BizLaw, our lawyers mean business. We have over 25 years of experience in franchising. Whether you would like to start a franchise business, or you are an experienced franchisor, we can help. Contact our Florida franchise law firm today to schedule your initial consultation and learn how we can help you.