While most entrepreneurs are aware that franchising their business could lead to an additional revenue stream, there are many other ways that franchising could improve your business. Naturally, a company can make money in franchise fees and royalty payments but other reasons to franchise a business in North Carolina include potentially increased brand exposure and dominance in the marketplace. As a result, starting a franchise can lead to both short-term and long-term business success and a franchise business attorney could help you realize this expansion.
A franchisor retains special financial rights over a franchisee. In order to obtain the rights to use a franchisor’s trademark, brand, products, and to follow a business model, a franchisee must pay an upfront fee known as the franchise fee.
However, the payments that a franchisee must provide do not end there. Franchise agreements also include a required royalty whereby the franchisee must pay a portion of their gross sales to the franchisor in exchange for the right to continue operating as a franchisee. In these ways, franchising a business in North Carolina can bring relatively passive income to a business owner who has an in-demand business model or patent.
While the immediate financial benefits to offering franchise opportunities are certainly significant, many franchises can lead to increased market share, brand recognition, and brand equity. All franchisors should use franchise feasibility studies to determine the effect of the franchising plan on the marketplace. If these studies indicate an ability to gain a greater share of the market or even the potential opportunity to decrease the viability of a key competitor, expanding a business through franchising may lead to greater market penetration and a more competitive business overall.
Offering franchise opportunities can also work to protect and expand the influence of the franchisor’s trademark, brand, and products or services. Holding a patent or a trademark could allow another source of income from licensing these assets to third-parties such as grocery stores or big-box retailers, potentially leading to an increase in the brand’s reputation in key market segments.
Reputation can clearly indicate the value in the eyes of investors or potential buyers. If the time comes to sell a business, a potential buyer may pay more for the ability to reap the benefits of a franchise structure. Increasing the overall value and prestige of a brand is just another reason to franchise a business in North Carolina.
Your vision as an entrepreneur has brought your company this far, and we know that your ambition and drive could see your business grow further yet. A strong way to expand is to offer your business as a franchise opportunity, increasing short term revenue, building channels for long-term prosperity, and increasing the power of your brand. By strategically building your franchise, you may even gain dominance over certain geographical markets or other market segments. If done with care, there are many reasons to franchise a business in North Carolina. Talk to an attorney today to start plotting the course for your business’ expansion.