Business Lawyers- What Is Franchising?
ClearWay Law has business lawyers in Toronto, Ontario. If you need a Toronto business lawyer, please call us toll free at 1-844-466-6529
Franchising is complex, and a lawyer can help you make sense of it all. We included some basis explainations below.
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The basic document you use to qualify prospective franchisees. Each buyer needs to fill this out at the start to show they are serious. It is the best way to determine if they meet the necessary financial and business needs and fit the culture of your brand.
A legally binding contract between a Franchisor (seller) and Franchisee (buyer). Provides the owner with the legal right to set up a location, use the Franchisor’s product, name, programs and work with the system.
A practical manual for franchisees providing them with almost everything they need to run their business. It is a reference manual during training and once they launch their location. Topics include logistics, office/store procedures, marketing tactics, financial metrics, systems, staffing, and the operational issues.
Franchise Disclosure Document
This document should be signed by potential franchisees before you provide full disclosure regarding your franchise system. This protects both parties regarding disclosed information to be used only during discussions of becoming a franchisee. Although often US-based, many Canadian firms are using it.
I can provide these documents, customized to your brand for less than $9,000 and this can get you started quickly and efficiently. We have the experience to do this for you.
You grant a license that gives the franchisee the right to use your trademark, brand and operating systems after paying your basic franchise fee. A license usually has a contractual, fixed term.
Considering franchising, here are some necessities:
- Your business must be clone-able
- You must be able to support all franchisee owners
- Your franchisees must be committed to selling your goods or services
- You need an existing system in place that can be transferable
- You must be a great leader and mentor/coach your franchisees
Royalties provide support for franchisees.
Fees are collected monthly/quarterly, based on gross sales and used for:
- Research and Development,
- Sales and Marketing strategies, tactics
- Technical resources – computers, accounting programs, networking
- Training and support all year
I have the experience in working with large franchise operations as well as with start-ups. We provide support at all levels: documentations, manuals, brochures, websites, sales, marketing, advertising, support and much more.
Franchising is not for everyone. If you have a single business location and are happy with the results, fantastic! If, however, you are the crossroads of how to take the next steps and franchising may be a consideration… please call us.
For a lot less than you may have thought, you can make the move into franchising. Let us help.
Toronto Business Lawyers
We help franchises every day: legal firms, accounting practices, in-home tutoring services, supplemental education schools, print and media shops, cleaning companies, nutrition stores, fitness outlets, coffee shops, restaurants, clothing stores, and more.
There are several ways that you can start up a franchise business. You could go with a bricks and mortar (meaning a storefront or retail type of business) or you could develop a home-based business.
Some of these decisions are based on your available finances, some are based on your desire to maintain a smaller footprint in terms of employees or lifestyle and some may be due to specific expertise that fits the franchise.
Business Lawyers- What Is Franchising?
There are a few of our clients who can bridge both gaps: ClearWay Law is one of those. What this means is that you may start out in a home-based office during the first year and expand to a larger space and infrastructure in the second or third year. It is a great way to keep costs in line as you market yourself and the brand you have selected. Moving up to an office is simple and there are many options once you are ready. These franchise operations are set up to help you front the start.
I enjoy the luxury of working with all three of these types of enterprises. It means we can most often match you with the right business opportunity, depending on your circumstances. We determine this during our initial discussions and further documents you fill out to show your finances and your suitability for a particular franchise. Our clients have been chosen very carefully to fill a need in a given market.
It costs money and resources! We can help if you are ready to seriously investigate the franchising market. We have seen the paths to success and have also seen companies fail.
You need to have money to expand. In order to take the first steps, you will need documentation:
- Franchise Operations Manual
- Franchise Collateral and Marketing Materials
- Application Forms
- Agreements For Franchisng
- Franchise Disclosure Agreements
You will also need the resources to support your franchisees. A team of knowledgeable staff will make the difference with happy franchise owners. There is training to consider for the new owners, how to address lead generation and lead management, finding a perfect location and many other items. After all, you want your “zees” to be successful as quickly as possible. You have entered into a long-term relationship and the future of your brand depends on successful arms of your business.
How do you establish a price for the initial Fee? What royalties do you charge? Should the marketing fund be 2% or more, or less. And most importantly, how will you invest the marketing funds you collect? It is an art and a science that can be very expensive. If you collect $100k every year, should you spend it on advertising in industry magazines, in business journals, radio, on-line?
It is a common saying in franchising that you are in business for yourself, but not by yourself. Therefore, our company looks at franchising as a balance between being an employee and starting your own business from scratch. Be your own boss today!
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The main issue when you start a new company is building your brand and teaching the market about what you do or sell. If you open a Subway in Vancouver, you don’t need to spend a lot of money teaching people what a Subway offers. Instead, you can just focus on providing the best customer service possible and letting customers know where you are located.
Amyn Ali bought into a Wing Zone franchise eight years ago in the Chicago area because of the simple turn-key operations that franchising offers. Ali knew that purchasing a franchise minimizes risk instead of going into business on your own. Amyn now owns three Wing Zones locations, ten Dunkin’ Donuts and one Papa John’s franchise.
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