Franchise Business Experience
For a dozen years, I created and ran a franchise company in the craft beer space. It was wonderful and a nightmare, all at the same time. And what made it all the worse is that I was operating the flagship store, which was extremely busy and very successful. Everyone likes to pick at the successful kid, right? We managed to find a few excellent operators, right out of the gate, but then we ran into the quicksand, which we spent the next eight years in.
We did everything we could, in our start-up phase, to not spend money. We were small and independent with no big bank loans or corporate sponsorship. We paid way too much money to a group to franchise our business, which would include helping us define & develop our model, and most importantly, get it on paper. I had a bad feeling the day I received a call from the United States Trademark and Patent Office, asking me why no one would call them back, as they had a question about our mark.
You see, most of these “groups”, which cost $25,000 - $50,000 (and then get a portion of your royalties for a few years), may not be experts in franchising or business, but have the road map on ‘how to’ franchise. They network the whole thing out, if they can’t handle it in their office and generally speaking, everyone in the operation will have a less than exceptional feel about them. It’s all kinda weird, in hindsight. This by no means captures everyone out there, in the franchising world, but you do need to be careful!
First piece of advice: do not hire a franchise company or group to help you. It is my belief that with a solid and franchisable concept, including a thoughtful name, brand, and model, a great franchise attorney, and a few good forms, including your FDD, Franchise Agreement, and Operations & Employee Manuals, you’ll be in great shape.
Second piece of advice: hire a franchise attorney! It’s not going to cost you anything for a consultation. They will start charging you when they start working for you, but you can be well aware of what their rates are in advance, and plan for it. We use Khalil & Sheldon and they are fantastic. We now use them for all of our business legal needs, including trademarks, as it just makes more sense. We’ve worked with Brendan Palfreyman for trademarks. He’s part of Harris Beach PLLC, and can get an attorney for any need you may have. They are an excellent group!
The single largest mistake I made, from the beginning, was not having a franchise attorney for document review, especially. We relied on less-than-acceptable documents and franchise business crooks to advise. We ended up in a legal kerfuffle just over three years in, specific to a territory dispute, which an attorney would have caught.
Third piece of advice: work hard on your territory and license area, as will be defined in your documents. Don’t just make up a number; do the work to figure out what your territory should be based on a multitude of factors. There is lots of information out there and you should get it all and noodle the heck out of it every single day for a month, minimum, before you decide what your territory size will be. Some things to consider: population density, average household income, over and under-saturation, and purchasing & traffic patterns.
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Franchise Resource Hub is a very good option for someone looking to franchise their business. Spending $399 seems like the best first step to figuring out if franchising your business is the right move.