Franchise Startup Questions

When you finally take the leap and decide that you want to make a franchises out of your business, there are many decisions that you will have to make. Fortunately, like franchising itself, the process is rather automatic and the same set of questions apply to almost any type of franchise. Here are a few of the basic questions that every new franchisor must ask and answer, so the sooner you get thinking about them the better.

What franchise fee will you charge?
The franchise fee is an upfront lump sum that a person or company must pay to buy the right to be a franchisee. The best way to determine what the franchise fee should be is to look at what other, similar businesses charge and adjust yours to your specific business accordingly.

What Royalty Fee Will You Charge?
The basic difference between a franchise and a royalty fee is that a royalty fee is usually an ongoing charge. Failing to pay the royalty fee can be grounds for a franchisor to terminate the franchise agreement and retake their territory. Royalties can be either a fixed amount or a percentage of revenues.

How Long is the Franchise Agreement Good For?
Franchise agreements usually last 5, 10 or 20 years but are normally limited to a fixed number of years, after which the franchisee may or may not have an option to extend.

Other factors that you will have to decide upon are the size of the territory being offered, the training program you will offer if any, the sources of inventory and products, and others.

If you are interested in franchising your business, give franchise attorney Mario L. Herman a call to talk about the legal steps you must take to do it right the first time. Experience counts when hiring a franchise attorney and Mario Herman has helped several business people just like you take their companies from small local enterprises to national and international franchise successes.