• Thinking About Franchising Your Business?
  • January 23, 2014 | Author: Susan E. Wells
  • Law Firm: Jaburg & Wilk, P.C. - Phoenix Office
  • As a successful business owner or business owner with a new and trendy concept, you probably get approached frequently by people hoping to acquire rights to operate your business “back home.” You are probably flattered by the attention and consider how you can help the inquirer go into your business, for a fee, of course. What they are typically thinking about is called franchising. 
    If you’re considering franchising, you should make sure that you have your ducks in a row prior to launching your franchising efforts. Franchising a business prematurely is likely to result in failure, a waste of time and money and litigation. Taking the time to properly refine and institutionalize your business operation and develop an infrastructure for a franchise system will put you in the best position to offer a viable franchise opportunity and help your franchisees succeed.

     Brand Recognition: Because brand name recognition is the cornerstone of a franchise system, you should make sure that your brand name is strong, available and registered on the principal register of the U.S. Patent and Trademark Office (USPTO). If you have not yet determined the availability of your brand name, discussed the strength of your brand name with a trademark attorney and registered your brand name with the USPTO, you should do so. The registration process typically takes several months to complete.

     Methods & Systems: Refine your business methods, systems, marketing and advertising practices and trade dress. Locate local, regional and national vendors and suppliers for food products, furniture, fixtures and equipment and evaluate them in terms of price, quality and customer service. Work the kinks out of your methods and systems and establish best practices. Track the results of your various marketing and advertising efforts. Take the steps necessary to improve the economics of your business to make it profitable, particularly after your prospective franchisees pay your franchise fee, royalties and advertising payments.

     Standardization: Institutionalize your business methods, systems, marketing and advertising practices and trade dress. Standardized operational procedures are necessary if the product and service offerings will be consistent (and consistently good) from unit to unit. Standardization is also necessary for the franchisor to teach its franchisees how to establish and operate the business. Franchisees will appreciate and benefit from proven marketing and advertising practices. Trade dress will streamline build out and enhance brand name recognition.

     Operating Manual: Prepare an operating manual for your business. A franchise system operating manual conveys key information that your franchisees need to know about opening and operating your business in compliance with the franchise agreement and your policies and procedures, such as site selection and development, required operational practices, best operational practices, product sourcing, preparation and presentation and marketing and sales practices.

     Training Program: Establish a training program for your business. It trains your franchisees how to operate your business and be owners of the business. Consider what knowledge you need to convey to your franchisees other than through the operating manual. What knowledge or information would best be conveyed to, or understood by, a franchisee through the personal experience of on-the-job training or the Q&A of classroom training?

     Visual Language: Have a web design professional create and build a consumer website for your business, if you do not already have one. It takes several months to establish a presence on the web. Make sure your website can be expanded to accommodate your franchise marketing and sales activities and your franchisee intranet requirements. Have your webmaster utilize current search engine optimization techniques to improve your presence.

     Support: Decide what initial and ongoing support and benefits you will provide or make available to your franchisees. Site location and evaluation services or a list of required site criteria? Architectural design services or prototype plans? Tenant improvement build-out services or assistance, or prototype plans? Established sources of supply? Bulk purchasing power? Furniture, fixtures and equipment brokerage or ordering services or a list of required items? Marketing or local advertising services? Research and development with respect to new product offerings? What expertise do you need to acquire or what personnel do you need to hire or engage to provide this support?

    You’ve spent significant time and effort developing your new and trendy concept or making your business successful. Preparing your business to expand through franchising likewise takes significant time and effort. However, the time and effort can be well-rewarded.

    About the Author: Susan E. Wells is a partner at the Phoenix law firm of Jaburg Wilk. Her corporate and business practice encompasses all aspects of business matters and commercial relationships in numerous industries. She has extensive experience representing both franchisees and franchisors.

    This article is not intended to provide legal advice. Always consult an attorney for legal advice for your particular situation