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Top considerations for owners looking to franchise

On Behalf of | Aug 17, 2022 | Business Law |

When a business is successful, one way Michigan owners might consider scaling it is through franchising. There are many pros and cons to franchising as a pathway to growth. It’s a good idea to carefully think through the legal and business steps and considerations before moving forward with franchising. 

Here are a few of the main considerations that business owners might want to investigate if they are considering expanding their business through franchising: 

  • Contingency planning: A business should have a proven concept that is different from competitors and looks good from a growth modeling perspective. There should also be clear numbers demonstrating its ability to shoulder things that may arise, as the cost of unforeseen issues can multiply with a franchise. Risk management is important in any business, especially one that is growing. 
  • Replicable structures: Consistency is key for franchises, which is why having clear and replicable standards of operations and brand experience is so critical. Outlining these expectations in the franchise agreements is also necessary for consistency. 
  • Licensing agreements: Knowing what details and expenses franchisees are responsible for is very important, as is the onboarding process for new franchise owners. Having all these details clearly thought out, documented, and legally backed up is key for new franchise businesses. 

Most successful franchise-based businesses think through their standard operating procedures, brand replication, and financials before choosing to expand through a franchise model. Individuals who are considering scaling in this way will undoubtedly have legal questions. For example, one legal complexity can come when opening locations in multiple geographies with different laws in play. To work through these details and understand the legal agreements needed to expand through franchising, it’s a good idea to speak with a Michigan business attorney. 

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