FAQ

Why Should I License My Own Franchise?

 

Franchising may offer you the opportunity to take control of your career, finances, schedule and future. You may operate the business, work
hard for yourself, and potentially reap the rewards that a franchise can offer.

How Do I Choose The Right Franchise?

Deciding which franchise is right for you is a huge decision. The right franchise should not only interest you, but the initial investment amount must fit into your budget and it should enable you to live the lifestyle you desire (do you want more free time, more money, control over your work environment?). Additionally, any franchise you choose to buy must meet market demand in your community. If there is no market demand or the area is already saturated with similar businesses, your new franchise will not have a bright, long future ahead of it. The best advice is to do your research before signing a franchise agreement. Speak with current and past franchise owners and make sure there is in fact a demand for the business in the area you’d like to open the business.

Why Should I Buy A Franchise?

Regardless of whether you have industry or business ownership experience, you can purchase most franchises because the better, established
franchises offer complete training, comprehensive support, a proven business system, and a product or service that has proven itself to be popular and in-demand.

How Much Does A Franchise Cost?

The cost to buy a franchise varies greatly depending on what industry you choose to start the business in, whether the concept requires a storefront,
office, home office, or is mobile, what state you buy the business in, and how much overhead your business will require. There are concepts that cost under $10,000 to start and other franchise businesses that require the investor to have millions of dollars in available liquid capital. Additionally, many
franchise concepts offer to finance or can help you gain financing if you’re interested.

Can I Have A Business Partner?

This varies depending on the preferences of the franchisor but yes, most concepts will allow you to have a financial partner who may also be
an operating partner, if you choose.

Can I Own More Than One Franchise?

Yes, but again, this can vary by franchise concept. Many franchisors will sell area or master franchises within a certain specified territory. These
larger territories can be costly. If you own a single franchise and are successful, most franchisors will be pleased to sell you another territory. If you own one concept and would like to purchase another franchise from a different, unrelated brand, this is usually possible unless you plan to
buy a competing concept. Make sure to read the entire franchise agreement and also have an attorney who specializes in franchise law look over the
agreement before you sign it. Let your attorney know that you plan to purchase another franchise concept in the future, so he can ensure you won’t have problems.

How Can I Receive A FDD From
A Franchise Company?

After your initial contact and discussion with Kim, you’ll be presented with three to five franchises that may be of interest to you. Once established,
and with your permission, you’ll likely speak with the franchise development individual who works for the franchise you’re interested in. If you
are seriously interested in the concept, they will likely offer you a copy of their FDD (Franchise Disclosure Document) for review.

Which States Are Franchise Registration
States?

Fifteen states have franchise investment laws that require franchisors to provide pre-sale disclosures, known as FDD’s to potential purchasers. These
states are California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota,
Virginia, Washington, and Wisconsin.

What Are The Best Franchise
Opportunities?

There’s a lot that goes into determining the “best” franchise opportunities. Startup costs, ongoing overhead, franchise fees, support, brand
strength, and financial stability can all play a role. Fast food service usually ranks high as well as service-based businesses like senior care
and mobile franchises.  The “Best” franchise is the one you’ve researched and believe in.

Is A Franchise Business Profitable?

When choosing a franchise you’ll want to consider the things that make any business profitable. Things like overhead, startup costs,
franchise fees, and ongoing training and support can eat into your profits and affect your success. Research, due diligence, speaking with existing
Franchisees and those who have left various systems will provide you with the insight necessary to make a determination. It’s important to understand that NO franchise can guarantee your profitability and shouldn’t. 

What Is It Like To Own A Franchise?

Owning a franchise is like having the best of both worlds: you are essentially a business licensee and potentially gain financial freedom. You
may also have the backing of a strong brand. The better franchise companies have taken away all the guesswork in starting a business and do a lot of the heavy lifting for you.  This doesn’t mean you’ve no work to do. Success in franchising is never easy.

What Are Some Tips For Starting A
Franchise?

If you’re considering a franchise, your first step is to make sure you have what it takes to run a business. You’ll also need enough capital
to purchase the franchise and give yourself a cushion while ramping up. Talk with other franchisees to learn more about the opportunities you’re exploring. Most importantly, be willing to work hard.

Are Franchises Considered Small
Businesses?

Franchises are very much like small businesses, but with the backing of regionally or nationally recognized brands. This model tends to have
a higher level of success than a typical small business, and you get all the benefits of having your own franchise, hiring staff, and setting your own
schedule where possible.

What Finally Pushed You To Start Your
First Business?

Time and financial freedom are the most common drivers of starting a business. In many cases, it’s a great way to increase your earnings potential
and not have to rely on someone else for job security.

Is Franchising Right For You?

Franchising can be a great opportunity, but it’s not for everyone. You might be a good fit if you have some business experience, are self-driven,
and can work independently. You should also be able to carefully weigh risks and recognize good opportunities.

What Are The Pros And Cons Of
Franchising?

A huge advantage of franchising is that you get a turnkey business with very little guesswork in setup. You may also have a strong system of support
helping to guide the way to success. On the downside, you don’t have total control over how the business is operated. It can also require a significant
upfront investment to get started.

What Is A Master Franchisee?

A master franchisee is a franchise operator over a specific area or territory. The franchisor gives the franchisee control over all franchising
activities, which means you’ll typically have multiple locations.

Should I Buy A Franchise Or Get A New
Job?

Ironically, buying a franchise is just like getting a new job – one you create for yourself. If you have the capital, starting a franchise is
an attractive alternative to seeking employment. It gives you more freedom over your career and can potentially increase your earnings potential.

How Quickly Can I Open A Franchise?

Once you purchase a franchise, you can expect to open anywhere from two to nine months. Most of the work is already done for you in terms of
designing a store (if brick and mortar), sourcing equipment, and creating marketing materials. Your franchisor should be able to provide a more accurate timeline.

What Is A Franchise Discovery Day?

A franchise Discovery Day is a face-to-face meeting with a franchise company you’re considering. These usually take place at a corporate office and
serve as your opportunity to go behind the scenes of the brand, ask questions, and decide if it might be a good fit for you. You’ll meet
key personnel and “discover” more about the particular franchise.

Do Franchises Have Defined Territories?

The majority of franchises follow a defined territory concept. This is helpful if you plan on opening multiple locations as a franchisee, as
it helps to protect your area from encroachment. It is vitally important that the franchisor provides absolute and easily understood criteria for
any protected site, territory, area, or location.

Can I Open A Part-Time Franchise?

Part-time franchising can work in certain conditions. This is a great option if you’re looking for a side hustle without giving up your current
job. Most franchises don’t require you to be open a certain number of hours or days to qualify.

Is It Wise To Take Out A Personal Loan
To Fund Your Business?

For some people, using personal loans to fund their business is their only option. It can also be risky, though, because you’ll be on the hook
for repayment even if your business fails. It’s important to have a plan to repay the loan in this case.

What Businesses Are Best For A
Recession?

Recession-proof businesses are the ones that offer a service people need, no matter the state of the economy. Food and groceries, retail consignment,
accounting services, in-home senior care, technology and IT, and childcare may all fall into this category. Keep in mind that recessions are just one of many threats that can impact a business’s ongoing success.

Where Can You Get Startup Money For A
Franchise?

Some franchisors will finance portions of the purchase, which is often one of your best options. You can also look into bank loans, SBA loans,
401k rollovers, grants, crowdfunding, or good old-fashioned loans from investors, friends, and family.

 

 

HIRING AN EXPERIENCED FRANCHISE LAWYER Is important! :

1.  Buying a Franchise? Don’t be Penny-Wise, Pound Foolish


You are about to make a huge investment buying a franchise. Many prospective franchisees before you have jumped in feet first without testing it
and have been burned. The majority of franchise opportunities require an investment of hundreds of thousands of dollars, and a good franchise lawyer
will help you understand what you are getting yourself into.  Your franchise lawyer should be well-versed in reviewing the Franchise Disclosure
Document (FDD) and franchise agreement to pinpoint future legal issues and provide areas where you may be able to negotiate a better deal. This should not
take more than five hours of billable time for a franchise lawyer experienced in reviewing these documents. An experienced franchise lawyer should also
be able to assist you with reviewing the commercial lease agreement for your franchise location to ensure that you understand the terms of the lease
and to negotiate objectionable provisions in the lease with the landlord. Other benefits of hiring an experienced franchise lawyer might be that he or she
could provide you with tips on what type of locations should be targeted based on experience with past clients in that particular franchise industry or a
similar one. Spending a few thousand dollars or less on an experienced franchise lawyer could protect you from many more thousands of dollars in
future liability, could get you a better deal overall in the long run, will give you peace of mind, and also could save you from a bad legal and financial
situation with a franchisor that is less than reputable.

2.  Starting a Franchise? Franchise Lawyers with Experience can Guide You Through the Process


If you are starting a franchise from your profitable business, you should first seek out an experienced but cost-effective franchise lawyer to prepare your franchise
documents, including the FDD and the franchise agreement.  Shop around because legal fees for this process can be all over the map ranging from
around $15K to upwards of $35 to $50K. More money doesn’t necessarily mean better lawyers; paying more might simply mean the law firm has more overhead.
 In addition to preparing a customized and legally-binding FDD and franchise agreements, your franchise lawyer hopefully have the experience
to provide input on related franchise documentation, such as the operations manual, training manual and a franchise sales brochure.  Employment and
labor law issues – and possibly immigration law issues – may also arise in setting up a franchise company from an existing business.  There are many
non-lawyers out there offering prospective or “startup” franchisors cookie-cutter legal documents for a price that usually exceeds the legal fees
for a custom document prepared by an experienced franchise lawyer.  Buyer beware on these “franchisor factories” that often provide samples
of FDDs or franchise agreements. Oftentimes, prospective franchisors will need to seek out the counsel of – and pay – a franchise attorney to clean up the
off-the-shelf FDD and franchise agreements prepared by inexperienced vendors.  Paying double is not necessary.  Right from the start, prospective
franchisors should seek out the best, most experienced, franchise lawyers in their area.  There are a few good small firms with low overhead
that have the skill to prepare your franchise documents but charge half the amount in legal fees as a big firm.

 

3.  Beware of Lawyers Moonlighting as Franchise Lawyers


Many commercial lawyers or general counsel will advertise “franchising” as one of their practice areas.  There are many different areas of franchising, and some lawyers who
advertise as “franchise lawyers” simply represent franchisees in the sale of their business, just as the sale of any other business might require the
assistance of counsel. When approaching a lawyer, make sure to ask targeted questions about their franchising experience. 

If you are a prospective franchisor, you might ask: Have you represented franchisors? Have you represented other franchisors in my industry?  

How many FDD’s and franchise agreements have you prepared? Have your agreements held up under scrutiny by the regulators in the various franchise registration states? 

It is essential that the franchise lawyer you hire have experience representing franchisors and not just clients who license their products or trademarks. 

Franchise laws are very specific on the federal and state level, and compliance with these laws is essential to the growth and profitability of your franchise system.  

If you are a prospective franchisee, you might ask the lawyer about his or her experience reviewing FDDs and franchise agreements; experience reviewing commercial leases; how other franchisee clients in your particular industry have fared; whether there are fixed rates for review of certain documents; experience in reviewing financing documents; and experience dealing with EB-5 and E-2 visa issues for international buyers.  Generally speaking quality lawyers who don’t deal in franchising on a regular basis to an experienced franchise lawyer when these issues arise but asking questions before paying dollar one is a smart way to approach it. 

 

4.  Experience in Franchise Law is Key

 

Would you hire a family lawyer to represent you at the table for your multi-million dollar real estate transaction?  Would you hire a criminal defense lawyer to handle
your bankruptcy petition? Same principle applies to franchising.  The franchise laws of each state are unique and the federal franchise laws must be
constantly monitored and reviewed to stay current.  It doesn’t make sense to hire and pay a lawyer for his time to “figure it out” when experienced
franchise lawyers know franchising already and who will not be passing along the extra costs to their clients.

 

5. Franchise Lawyers Often Have the Right Connections for Startup Franchisors


Some well-rounded franchise lawyers work with vendors in areas that are critical to the startup franchisor. Branding, operations, training, and
website design are just some of the components to starting up as a franchise company.  Experts in these areas can be expensive and time-consuming for a
prospective franchisor to track down and interview. Your franchise attorney might have connections in these areas, especially ones dealing with startup
franchises and other companies on a daily basis, and you may get a price break on these experts’ services.

 

6. Good Franchise Lawyers Might Offer Free Consultations


To many, franchising might seem like a daunting venture not in the realm of financial possibility as an expansion model for a successful business.  Why not kick
the tires and find out?  Many of our franchise law colleagues will offer a free consultation to business owners to discuss the prospects of franchising
and the costs involved.  When we are approached by a prospective client, we are often in a position to inform the prospective franchisor that their
business might not be ready for franchising in our opinion or their business, as it is currently situated, might need to be reconfigured in order to be
successful as a franchise. During a consultation, good franchise lawyers will go through the costs of preparing the necessary documents and may put you in
touch with other franchise clients and/or experts in branding, website design, etc. if needed. At a minimum, a good franchise lawyer will be able to
advise you of the risks of franchising and may offer an opinion on the potential to be profitable based on a quick review of the business model.
 Even if you are a franchisee just thinking about buying a franchise location, a good franchise lawyer should be able to point you in the right
direction during a free consultation and provide the basics of what the lawyer can do for you.  Sometimes we are put in the situation where we know
there are no negotiating points in a particular franchisor’s agreements so we advise the client of such. More often than not, during a consult we will
explain exactly what we can do for the prospective franchisee and how long it will take for us to do it.

 

7. Franchise Litigation can be Expensive


Franchise litigation can be expensive. Franchise litigators regularly represent franchisors and franchisees in various disputes. Other than
outright cases of blatant fraud, which have been unfortunately seen in this industry, common disputes arise between franchisees and franchisors on a
regular basis that should be and could have been addressed by a franchise attorney before the client signed on the dotted line. Franchisees are often in
the situation where they are having contractual issues with the franchisor but they may not have the money to fund a lawsuit. Franchise lawyers
intercede on behalf of the franchisee to work out an amicable settlement of the issues with the franchisor.  If franchising is for you, you should know
what you are getting into before jumping in the water head first.

Source: Wasch Raines LLP