In the business world, the term scalability refers to a company’s ability to overcome the market challenges efficiently and increase profit as the business’s activities further expand. In Florida, there is no better example for scaling a company than franchising your business.
In this article, you will find out how to franchise your business in Florida.
Franchising a Business in Florida – Drafting a Franchise Agreement
When you franchise a business, you can expand its profitability and create a solid brand to encompass a larger consumer base. The process of franchising a company can be challenging and complex, especially when you are preparing the franchise agreement.
The franchise agreement is the document that grants the franchisee the right to use the franchisor’s knowledge, processes, and trademarks to establish a business. In exchange, the franchisor receives part of the franchisee’s profit, as well as several fees (e.g., initial fees, licensing fees, etc.).
When franchising a business, entrepreneurs must ensure to have a well-written franchise agreement before proceeding with the actual business expansion. Regardless of your business segment, it is fundamental to work with an expert business attorney to guide you through the process.
Drafting a Thorough Franchise Agreement – What to Include in a Franchise Agreement in Florida?
When the franchisor and franchisee sign a franchise agreement, they are entering a legal relationship under a legally binding contract.
When drafting a franchise agreement, you will grant the franchisee the right to establish a business using your trademarks, operations, manuals, and suppliers. Hence, you need to specify which intellectual property the franchisee has the right to use.
Then, you need to include the term of the franchise. Generally, most franchise agreements in Florida last for at least 10 years, but it is possible to define a different term depending on each case’s circumstances.
After determining a term for the agreement, it is time to detail the provisions in the contract, such as:
- The franchisee’s requirement to establish a franchise within a designated period
- The franchisor’s duty to provide the necessary training before the opening
- The franchisor’s obligation for providing ongoing training (whether required or offered by the franchisor)
- The geographical location where the franchisee will establish the franchise unit
- The franchisee’s duty to follow the operating procedures (as provided by the franchisor)
A franchise agreement is a business agreement, which means it is fundamental to define all provisions regarding the financial relationship between the franchisor and the franchisee(s). In this sense, the franchise agreement must provide:
- The initial fees that the franchisee must pay
- The existence of ongoing fees that the franchisee must pay regularly
- The existence of marketing fees or branding fees
Franchising a Business in Florida – Protecting Your Brand as a Franchisor
When you become a franchisor, your brand automatically becomes the most valuable asset in your company. Accordingly, you need to ensure that nobody uses your most valuable asset without your approval.
It is crucial to tailor your brand adequately, as it will represent your business’s values, culture, and customer service.
However, more than creating a solid brand, you need to protect your brand by maintaining a consistent experience at all franchisee locations. Also, protecting your brand requires a legal approach, especially when it comes to intellectual property and trade secrets.
When drafting the franchise agreement, create explicit guidelines that franchisees must follow to maintain business uniformity. Plus, you will need to monitor franchisee locations to ensure the local units have full compliance with your brand.
In Florida, you can also utilize restrictive covenants to protect your business’s interest when drafting a franchise agreement, such as non-compete agreements, non-disclosure agreements, etc.
Franchising a Business in Florida – Who is Responsible for Marketing the Franchise?
As a franchise owner, you need to think about the marketing arrangement you will have with franchisees. When drafting the franchise agreement, you need to define who is responsible for marketing the franchise, such as:
- Is the franchisor responsible for supplying franchisees with marketing support (e.g., banners, flyers, digital marketing strategies, ongoing training, etc.)?
- Will the franchisor grant franchisees the ability to contribute to marketing issues?
- Will the franchisor permit franchisees to engage in independent marketing efforts at the local level?
How to Franchise Your Business in Florida – Work with an Expert Business Attorney Today
Franchising a business in Florida requires a strategic approach. At Jurado and Farshchian, P.L. we have a team of expert business attorneys to help you throughout the process of business franchising in Florida.