Do you have a small business that can be launched as a franchise?
There are many routes to grow a small business but franchising may be one of the best ways to expand it at a fast pace. If you have a business that is easily replicated and would like to launch it as a franchise, here are a few things to consider to help you through the process:
Get your business organised. Think about the process of precisely how your business works to the small detail. Franchisees will need exact guidelines to get their businesses up and running. This process takes some time, but it’s worth it — even if you decide not to launch the franchise option, this will still ultimately help your business run more smoothly. From marketing to signage to business cards to staff training, it all has to be executed in a similar manner. Develop an operations manual to give franchisees a quick way to reference policies and best practices and create an approval process so that you sign off major decisions.
Build and protect your brand. As a franchisor, your most valuable asset is your brand; protect your intellectual property at all costs. Your brand represents your company culture and your attitude toward your service to your customers. When you franchise, you are giving new people the ability to represent your unique brand. This is one of the biggest risks of franchising. Clear guidelines should be established for the use of all of the brand assets. You want to be sure that you are sending one clear message from one clear source, and that message is consistent throughout the organisation. No detail is too small. This can seem overbearing, but never let anyone use your brand assets in any way, no matter how small, without your prior approval.
Hire a commercial solicitor. Getting expert legal advice is really crucial during the franchising process. Your solicitor with help you plough through the details and draft your bespoke Franchise Agreement to determine your intellectual property protection mentioned above.
Other aspects of that the Franchise Agreementshould include:
1) The rights to be granted to the franchisee should be clearly set out in the agreement; each party should be clear what it intends to achieve. How far these can be negotiated depends on the nature and strength of the franchise and what the franchisee has to offer in its development in the territory concerned. It is relatively unusual for a UK domestic franchisor to accept material changes to its standard franchise agreement.
2) Exclusivity:The franchisee will normally ask for exclusivity, so that there are no competitor suppliers of the product in the territory, and the franchise is thus likely to be more successful.
3) Territory: The country or region in which the franchise is to operate should be clearly set out. The parties must understand the commercial, political and (particularly overseas) cultural factors involved, and ensure that the franchisee has sufficient skills and resources to develop the business there. A clear business plan at this stage is essential.
Finally, give support to your franchisees. The process of becoming a franchisee is very exciting but it can also be a daunting process, especially if it is someone new to running a business. Initially, you’ll need to commit some time with your franchisees to ensure that they are comfortable with what they are taking on. Provide training to go through certain procedures and formats, and important details of the Franchise Agreement. Your franchisees may like to consult a solicitor to go through that with them. This is often helpful for the franchisee to obtain independent legal advice at the outset to minimise the possibility of any franchise disputes in the future.
If you require any further information on franchising your business, please call Tebbitts & Co Solicitors on 01270 211567 or email firstname.lastname@example.org to book a free ½ hour consultation with our commercial solicitor.