Franchising Lawyer NYC - Francelina M. Perdomo Klukosky of Perdomo Law

The businesses that meet the requirements for a franchise include service and retail locations. Some examples are:

• Home repair and improvement businesses
• Home design and furniture shops
• Restaurants
• Retail shops
• Fitness-related businesses
• Senior care services
• Pet-oriented businesses

• McDonald's is the most well-known franchise success story in the world. Its success shows the extent of what the best franchise opportunities can achieve. The company began with a single restaurant in 1955. It began with a man who was only trying to interest restaurant owners into buying milkshake machines. The corporation now has about 37,000 locations in over one hundred countries that collectively earn around $33 billion each year. McDonald's is not the only company that used the popularity of a small business to expand its reach and optimize the potential of other entrepreneurs. Many of the best-known companies in operation today achieved more once they chose to franchise than what they could have made any other way.

• Mathnasium: The at-home tutoring company made the most out of a bad situation when COVID lockdowns forced millions of students to learn from home. Mathnasium offered parents a way to get the extra help their children needed when they fell behind while remote schooling. As a result, the company now has over 1,000 franchises in the United States that are thriving.

• Wingstop: Pandemic worries did not slow down the fast-food franchise Wingstop. Wingstop was a small business dedicated to producing fast food but making every order individually as a custom order. A focus on perfecting their online ordering and home delivery ensured that the 1,400 franchised US locations continued to thrive. The company even announced massive increases in its sales during 2020-2021 when other restaurants were closing their doors.

• Just Between Friends: Shannon Wilburn began holding pop-up sale events offering used clothing in her living room. The events did well enough for the entrepreneur to expand the idea, and she began offering franchise opportunities in 2004. Today, the company has 151 franchisees – who often make six-figure profits despite the businesses operating as part-time entities.

1. Determine if the business will work as a franchise.

2. Register as a franchise in the state you are interested in operating as such 

3. Have Franchise Disclosure Documents prepared by an experienced franchise lawyer.

4. Develop an operations manual for the franchisees to use as a guide to run their location.

5. Register all trademarks (logo/ business name) with the United States Patent and Trademark Office.

6. Establish an LLC or corporation to operate, sell, and manage the franchises.

7. Register and file the Franchise Disclosure Document as state laws require.

8. Develop a business plan that includes the budget and sales strategy for the organization.

It is impossible to give a definitive time estimate for turning an existing business into a franchise. The answer will depend on how quickly the business owner or partners work through the process and how much legal help they need. The desirability and effectiveness of the franchise opportunity can affect how long it takes before interested franchisees take advantage of the opportunity. Conservatively, a business owner should expect to devote 3-6 months of their time to establish the business as a franchising opportunity before it is ready to offer to franchisees.

Entrepreneurs often want to turn their idea into reality instantly. The concern in the business world is that someone else will capitalize on a great idea. The tendency to rush is not always best when developing a franchise opportunity. A slower approach can benefit future franchisors in numerous ways.

Improve Branding: Before the offer goes out, the company should create an eye-catching logo and choose distinct company colors or slogans which make the business more memorable and unique. Branding is essential for franchises because it enables people to recognize the connection between various locations when they see them.

Increase Marketing: Businesses rely on advertising to draw in new customers and encourage existing ones to spend more. Marketing today does not always require a substantial investment. Savvy business owners know how to maximize signage, social media, and events to draw attention. Take steps immediately to get the company name in front of as many people as possible without any advertising budget increase.

Maximize a Website: Use the time preparing for the franchise expansion to build or improve a website. Consider the potential growth of the business once franchise locations open and how the website will incorporate these. Improve the customer experience for people who want to shop online. Adapt the site to work perfectly for everyone regardless of the device used to access it.

Build Connections: Franchisors need to have connections in the areas where they hope to expand the business. Developing business ties with individuals and organizations in other states or countries can make it easier to gain trust. Consumers in the communities will feel more comfortable with companies whose owners are associated with reputable organizations they recognize.

The cost of turning an established business into a franchise opportunity can vary. Some estimates can be as wide-ranging as $10,000 - $300,000. The amount depends on the company. A business that already understands the process, can build its websites, and market itself effectively will spend less than someone that needs help for every part of the process. The expenses people should plan for include:

• Hiring a lawyer to create the FDD.
• Collaborating with a team to prepare the operations manual.
• Hiring a CPA to provide an accurate and complete financial statement.
• Incorporating the franchising entity.
• Copyrighting all trademarks.
• Paying FDD registration fees for each state.
• Designing and establishing a website.
• Developing a sales presentation.
• Devising a marketing plan.
• To advertise the company and the opportunity to invest in the franchise.

Most businesses do not have an endless amount of money to use for franchising ventures. Franchisors can use budgeted funds wisely by focusing their spending on what needs the most attention. Consider using the bulk of the budget on writers, legal help, and financial matters.

• Writers: An Operations Manual is one of the most important documents the franchise will have. Collaborate with skilled business writers to prepare a clear and detailed manual to share with franchisees.

• Lawyers: An experienced franchise lawyer is not an expense but a necessity. Lawyers help with document preparation and filing, tax concerns, and much more. Most franchisors rely on lawyers to prepare their FDD. A lawyer can also help with incorporating, registering trademarks, and much more.

• CPAs: Tax experts and CPAs can help create detailed financial statements, plan budgets, and much more.

Licensing allows someone else to use the trademarks of an established business. It is a franchise without the legal protection of a franchise agreement. The trademark holder could lose the opportunity to make money, and the arrangement could harm their brand. Licensing exposes a business owner to a variety of potential losses.

• The licensee has control over the look and operation of their business without the input of the trademark owner.
• The trademark owner usually earns less from licensing than they would for franchise fees.
• Illegal actions by the licensee could expose the business to liability issues.
• The trademark owner may not have control over the quality of the product or service the licensee produces under their trademark.

Everyone has the right to prepare documents and perform filings on their own. The complexity of copyright and franchising laws makes it difficult for most business owners to feel comfortable navigating the processes alone. Hiring a lawyer increases the initial cost of the process, but it often saves companies time and money overall. Professionalism and accuracy make it worth the expense to have a skilled franchise lawyer available.