If you’ve founded a successful business and are interested in franchising, you may be wondering where to start. The legal and financial procedures may seem overwhelming at first, but by taking things one step at a time, you can conquer the process of preparing your business to franchise.
Create Procedures
So far you’ve run your business the way you wanted to, but when you franchise, you have to make decisions about what items you’ll keep and which ones you’ll leave up to the franchisees. A successful franchisor allows franchisees to customize the franchise to the market in which it is located. No one solution works for all parts of the country.
You’ll also need to decide how far you intend to expand. If you’d like to start locally, opening just a few franchises, you’ll only have to worry about your state laws. However, once you begin operating in different states, you’ll need to fully understand the rules that apply to operating a corporation in that particular state.
Develop your Contracts
Before you can begin to seek franchisees, you’ll need to outline all of the legalese that will apply to your franchise locations. It is highly advised that you consult a lawyer that specializes in business franchises for this part of the process. While there are boilerplate contracts that address every aspect of franchise law, you’ll want an attorney who is familiar with your needs to draw up contracts with your particular business needs in mind.
During this time, you’ll need to decide whether to license as an LLC, S corporation, or C corporation. This determines how much you’re franchisee will pay in taxes each year. An LLC protects you, the franchise owner, from any activities of your franchisees.
Set Up Fees
At this point, it will be time to draw up a fee structure. This will determine how much franchisees will have to pay to open a franchise in your business name. You’ll also need to address any fees that will be assessed if your franchisee decides to sell the location to someone else.
These fees will be tied to the way you license your business. While you’ll want to set your fees low enough to attract business, you’ll also need to be careful not to set them too low. If your fees aren’t high enough, you as the franchisor will be forced to absorb much of the cost.
Get the Help You Need
In addition to consulting a business attorney, it’s important you have the help of an accountant during this time. While your franchisees will be responsible for much of the tax burden, you’ll also need to ensure you’re paying correct taxes as a franchisor. An accountant can help you ensure your books are in order to avoid trouble from the IRS. An accountant can also help look over your fee structure.
Structuring a franchise is an important part of growing your business. Luckily, qualified professionals are available to help you get everything in order before you begin to look for buyers.
If you’ve founded a successful business and are interested in franchising, you may be wondering where to start. The legal and financial procedures may seem overwhelming at first, but by taking things one step at a time, you can conquer the process of preparing your business to franchise.
Create Procedures
So far you’ve run your business the way you wanted to, but when you franchise, you have to make decisions about what items you’ll keep and which ones you’ll leave up to the franchisees. A successful franchisor allows franchisees to customize the franchise to the market in which it is located. No one solution works for all parts of the country.
You’ll also need to decide how far you intend to expand. If you’d like to start locally, opening just a few franchises, you’ll only have to worry about your state laws. However, once you begin operating in different states, you’ll need to fully understand the rules that apply to operating a corporation in that particular state.
Develop your Contracts
Before you can begin to seek franchisees, you’ll need to outline all of the legalese that will apply to your franchise locations. It is highly advised that you consult a lawyer that specializes in business franchises for this part of the process. While there are boilerplate contracts that address every aspect of franchise law, you’ll want an attorney who is familiar with your needs to draw up contracts with your particular business needs in mind.
During this time, you’ll need to decide whether to license as an LLC, S corporation, or C corporation. This determines how much you’re franchisee will pay in taxes each year. An LLC protects you, the franchise owner, from any activities of your franchisees.
Set Up Fees
At this point, it will be time to draw up a fee structure. This will determine how much franchisees will have to pay to open a franchise in your business name. You’ll also need to address any fees that will be assessed if your franchisee decides to sell the location to someone else.
These fees will be tied to the way you license your business. While you’ll want to set your fees low enough to attract business, you’ll also need to be careful not to set them too low. If your fees aren’t high enough, you as the franchisor will be forced to absorb much of the cost.
Get the Help You Need
In addition to consulting a business attorney, it’s important you have the help of an accountant during this time. While your franchisees will be responsible for much of the tax burden, you’ll also need to ensure you’re paying correct taxes as a franchisor. An accountant can help you ensure your books are in order to avoid trouble from the IRS. An accountant can also help look over your fee structure.
Structuring a franchise is an important part of growing your business. Luckily, qualified professionals are available to help you get everything in order before you begin to look for buyers.