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Costs Involved in Franchising a Business in North Carolina

As with every business venture, before a franchise sees profit, there are costs.

There are significant costs involved in franchising a business generally as well as in North Carolina, and while it may be possible to externalize some of these liabilities, others may remain a debt to your company. These expenses may include a feasibility study to determine whether there is potential profit in starting a franchise, administrative costs from the state, the cost of creating the proper legal documents, and securing trademark rights.

The Business Costs of Franchising

Business owners who are considering offering franchise opportunities are likely well-versed in the costs of running a company. However, they may not realize the immense impact that transforming a business into a franchise can have on their profit margins and presence in the marketplace.

A vital first step in the franchise process can be to order a franchise feasibility study. This requires an in-depth analysis of the company, the competition, and whether the marketplace can bear this franchise expansion. This process can take three to six months and may cost a few thousand dollars.

Another essential business step in offering a franchise is to secure the company’s trademarks and brand. It can cost a few thousand dollars to secure a trademark or other intellectual property at the federal level.

Legal Costs to Expect

The legal aspect of offering a franchise is far more complex and essential to successful franchise network operation and the costs of this process are substantial. Every party offering a franchise for sale must produce and publish a franchise disclosure document. These documents can be hundreds of pages in length and require significant legal analysis and financial information. This process could cost tens of thousands of dollars and it is advised that all potential franchisors work with an attorney to ensure that all requirements are met such as drafting a thorough franchise agreement. These are the formal contracts that define the franchisor/franchisee relationship and their creation should be factored in as a cost involved with franchising businesses in North Carolina. There may also be state franchise fees for selling a business opportunity.

Franchising Costs Money But Could Bring Significant Profit

Making the decision to convert a business into a franchise is always complex and there are immense costs involved in franchising business in North Carolina. Merely deciding on whether to take this step can cost many thousands of dollars. Performing feasibility studies and securing your trademark may require many months of work and could involve the hiring of experts and paying fees to other parties.

Additionally, owners must create legal documents such as a Franchise Disclosure Document and franchise agreement. While there are certainly costs to starting a franchised business, if it is done correctly, you stand to gain a whole new independent, and passive revenue stream as your business expands to the next level. Call our office today to schedule a consultation and prepare your business for tomorrow.