What is necessary to start the franchising process?

To franchise a business, a franchisor needs a franchise disclosure document (called an “FDD”) as stipulated by federal law. This FDD is usually between 100 to 200 pages and will give the prospective franchisee all the information about the franchise opportunity that they need to be aware of before they buy the franchise. Franchisors may also be able to outsource the sales portion of their franchise to a developer or organization that specializes in such work.

It is essential to conduct a franchise feasibility study before a person considers franchising their business. They must determine whether their business model is financially sustainable for franchisees, including projected franchise fees, royalty fees, and marketing fees among other costs the franchisees will incur.

It is important to work with a franchise attorney or consultant to look over the business model and find out whether someone can buy this franchise, spend a ton of money to get it up and running, and then actually make money. If the franchised business is not profitable, nobody will buy it.

Once a franchisor has done that, they must begin the process of franchising their business. A lawyer will draft their documents and have an executive meeting that is anywhere from one to two days, usually in person, during which the lawyer will gather everything they need to prepare the franchise documents. Once the lawyer gathers all that information at the end of the executive meeting, then there is usually a turnaround time of about 30 to 45 days for the initial draft. After agreeing on a final document, and after registration if required, the franchisor can start selling franchises.

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