Businesses looking for options to expand will frequently consider the idea of franchise development and turning their company into a franchise organization. The question is how to franchise a business when looking into this expansion vehicle.
Franchise Consultants have been in the U.S. since the mid-1970s and now are around the world making a living putting in place franchise organizations and setting up franchises. In the U.S., it is important to establish a franchise organization according to FTC guidelines and regulations.
An FTC-compliant franchise organization is required in order to legally offer franchises throughout the United States. Franchise consultants can assist with the setup, establishment and launch of a new franchise model.
It is recommended that when franchising a business in the United States, a new company should be formed to “house” the franchise revenue and activity in a separate organization from the company assets. This includes the hard assets of the organization as well as the intellectual property and IP should all be organized in separate corporations from the franchise activity. A competent CPA should guide a start-up franchise through this process with the direction and input from a franchise consultant.
The legal documentation required to offer a new franchise is termed the Uniform Franchise Disclosure Document. This agreement constitutes the deliverable requirements as directed by the Federal Trade Commission. The Agreement has two parts that constitute the UFDD, the first half of the document is the Offering Circular that describes the business relationship and principals involved in the new franchise.
The latter half of the document is the legal franchise agreement that legally defines the structure of the relationship between franchisor and franchisee.
There are professionals and experts in the field of franchising who can provide this type of expertise throughout the process of setting up a franchise and launching a new franchise system.
Franchise Consultants, Franchise Attorneys, Franchise CPA’s and other franchise industry experts should be interviewed and chosen based on their experience and merit as it fits with a specific franchise development project.