Before you take steps to franchise your business, it’s important to consider the pros and cons of this important decision. Franchising can be a successful strategy for growth, but it isn’t the right approach for every small-business owner.
Partnering with an experienced franchise and business law attorney is an effective way to explore your expansion options and decide on an effective course of action. However, before you consult with a professional, it may be helpful to get a sense of the world of franchising.
Advantages of Franchising a Business
Franchising comes with many benefits. Among the top reasons to consider this expansion strategy include:
- Minimal capital expenditures
- Potential for rapid growth and increased profits
- Heightened brand awareness beyond your region
- Competitive advantage from tapping into the local knowledge of franchisees
In short, franchising can be a low-risk, high-reward method of expanding a business.
Disadvantages of Franchising a Business
Being a franchisor isn’t all smooth sailing, however. The downsides to franchising include:
- May require a substantial financial investment
- Requires different skills than those used in managing a small business
- Offers less direct control, as franchisees operate as independent businesses
- Decreases time for day-to-day business operations, as franchisors need to recruit franchisees
However, not everyone considers these factors drawbacks to becoming a franchisor. And in many cases, these challenges can be addressed with careful planning and a legal expert’s input.
Is Franchising Right for Your Business?
If you’re fired up about franchising — and if this growth strategy feels right — you might be tempted to jump right in. Before you commit to becoming a franchisor, however, ask yourself the following questions:
- Does your small business have a solid history of profitability?
- Are your products or services unique and in demand?
- Do you have the financial resources to build a franchise system?
When you can honestly answer yes to all three questions, the next step is to meet with trusted advisors such as your CPA and an experienced franchise attorney. Be sure to look for a lawyer who fights for the rights of franchisors. A lawyer who mainly works with franchisees may not understand all the potential legal pitfalls for new franchise system owners.
With decades of experience working with new and long-term franchisors, the award-winning professionals at the Franchise & Business Law Group offer forward-thinking, client-centered advice to help small-business owners achieve success.
For more information on the Franchise & Business Law Group, or to schedule a consultation to discuss whether you should franchise your business or consider an alternative growth strategy, contact our office in Salt Lake City, Utah, today.