When a business owner contemplates potential growth opportunities, one that may come to mind is franchising. Business owners may have a general sense of what franchising is, but many are shaky on the details. Franchising is a business strategy that allows a business to increase the number of customers it has, retain customers and increase market share. Franchising is also a method of marketing and a method of distributing the company’s products and services. Franchising can also be considered a network of shared business opportunities that allows for shared brand identification, a shared successful method of doing business and a shared proven system of marketing and distribution.
Franchising can be a growth opportunity for both the franchisor and the franchisee, but it is important to carefully understand the relationship and how the relationship can enable growth and the future success of both the franchisor and franchisee.
Of course, as in all types of businesses, disputes can arise in a franchise business relationship. When these disputes turn into serious legal matters, they can create long-term problems for all the parties involved in the business relationship. When a franchise relationship is set up properly, both businesses can withstand the inevitable bumps in the road. When it is not set up properly, it can prove disastrous.
Attorneys with experience in business formation and planning can help both potential franchisors and franchisees to understand the legal matters that must be dealt with in order to secure a healthy and productive franchise relationship. By starting out the franchise on solid legal ground, all parties can be free to help their businesses grow.
Source: Franchising.com, “What is Franchising?” Bob Gappa, accessed June 19, 2015