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Franchising has now been going strong for more than 50 years. Why does it work? For would-be franchisors, it is a way to expand with other people’s money and human resources. For franchisees, it is a way to get into business without having to reinvent the wheel or go it alone. Of course, like any business venture, there is no guarantee of success for either franchisor or franchisee, and each should understand what they are…
We often talk to people who were told they could avoid the regulations of franchising if they simply granted a “license,” or entered into a “consulting agreement,” with a person who approaches them about opening a similar business. Be very wary of such advice; in most cases, these are unregistered franchises that can expose you to significant liability. As they say, “if it quacks like a duck…”.…
This is the time of year that we pause for a moment to reflect on the many things we have to be grateful for in our busy practice. We have the greatest clients in this field – engaged entrepreneurs and general counsel who take pleasure not only in the success of their companies but in the achievements of those with whom they work–and a team of professionals who impress me every day with their legal…
Experts will tell you the most important thing when you consider franchising your business is to do “X” or to check out “Y” or be certain you have “Z”. For me, rule number one is not unique to franchising but something I told each of my three children as they were growing up: Rule No. 1 is to “choose carefully”*. It is good advice in life – choose carefully before going down this path or that one.…
All too often start-up franchisors rely on a consultant or attorney to prepare their franchise agreements for them. If they work with an attorney who has extensive experience in preparing these agreements, their reliance may be appropriate, but recent legal actions against some big named franchisors demonstrate the importance of knowing what is in your agreements, and having them reviewed at least annually by someone who keeps up with trends, pronouncements, and changes in the…
Our last post, New Franchise Offerings Continue to Expand, talked about the explosive growth of franchising over the last several decades. Larkin Hoffman has been helping entrepreneurs franchise their businesses for more than 40 years, and we thought a look back at some of our original franchise clients would be instructive to people seeking to franchise their businesses today. In 1977 and 1978, we helped 3 companies franchise their businesses.…
In 1980, Entrepreneur Magazine published its first “Franchise 500,” which purported to rank the top 500 franchises in the United States, out of a total of just over 1,000 franchise systems. Today, the International Franchise Association, the trade association for franchising, best known as the “IFA,” estimates there are more than 3,500 franchise brands in the United States.…
How much money can I make? The first question on the mind of most prospective franchisees is “how much money can I make?” By law, financial performance information, or “FPRs,” can only be provided to prospective franchisees in a franchisor’s Franchise Disclosure Document. Many franchise attorneys have historically advised their clients against including FPRs in their disclosure documents out of fear that franchisees will not perform as well and the franchisor will be sued over…