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Are You Ready to Franchise Your Business?


Franchising is a choice to consider when deciding how to expand a business. It is a good choice for many companies, but is not the best option for everyone. Starting a franchise system can be like starting a new career, with its own different challenges.

If you're ready, you should also decide if the timing is right, because franchising a business prematurely can yield unwanted results. So how do you know if you and your business are ready for franchising?

Ask these initial questions (click on each for an explanation, or just scroll down):


1. How successful is your business?


2. How unique is your business?


3. How will you teach others to duplicate your business model?


4. How well do you understand the market for your service or product?


5. What's the franchisee's profit margin after paying fees to you?



Preparing to Franchise BusinessIf your answers indicate your business model is ripe for franchising, the next step is to talk with experienced legal counsel to guide you through the legal process.

Our Franchise & Distribution Practice Group has experienced franchise lawyers with the know-how to prepare Franchise Disclosure Documents in compliance with the laws that regulate sales of franchises, and also in accordance with related areas of law pertaining to trademarks, licensing, real estate, entity formations and other business transactions and litigation.

Three of our attorneys are Certified Specialists in Franchise & Distribution Law, as designated by the State Bar of California Board of Legal Specialization (currently fewer than 60 California lawyers hold this distinguished credential). Our lawyers have been asked to provide expert testimony in franchise disputes, and have served on committees for state and federal franchise law.

Read more regarding their credentials here: Franchise & Distribution Law Certified Specialists

Is your business successful?

Successful franchises see a steady stream of revenue. If your business is profitable, it may be possible to franchise it. If your business is not profitable, few will want to buy into your franchise system and they would not be likely to succeed.


Is your business unique?

Look for the distinctive advantages of your business, whether you're selling food, products, a service or something else that people need or want. You'll need to offer consumers something that compels them to choose your brand over your competitor's products or services.

How is your shop, store, service or center different, and better than others? Is yours better, faster or lower price than the similar service or merchandise offered elsewhere?  Your franchise should stand out in some way.

How can others duplicate your business model?

Franchising means duplication of your business at other locations. How will you teach others to build and operate the business in different locations, for different demographics of customers? For your franchise to work well, this will be important.

What is the market forecast for your product or service?

Do you understand the present and future market and consumer demand for your service and product? Your business must operate successfully today, and must also meet customer desires and needs for many years in the future. So look beyond the here and now. Will your business be just as successful in Wichita and Miami? Will consumers still need your product or service five or more years from now?

Can potential franchisees make a profit after paying fees to you?

Franchisees invest heavily in your business model by starting up their franchised business, and paying royalties and other fees to you. They bear the cost for employees, real estate, equipment and more. You need to know they will make a meaningful profit and enjoy a return on their investment, even after paying the initial fees, royalties, advertising fees and other charges due to you as the franchisor.


Click: Franchise & Distribution Law Certified Specialist to email us now.

LEWITT HACKMAN | 16633 Ventura Boulevard, Eleventh Floor, Encino, California 91436-1865 | 818.990.2120