Important to Know:
Common Pitfalls of Restaurant Franchising
For the franchisor, deciding to turn your restaurant concept into a franchise opportunity for others is a huge step in creating your business potential. As a unique business model, franchising involves many steps and protocols to put in place and manage, requiring a restaurant franchising attorney’s specific experience.
Launching a restaurant franchise or license business model has many common pitfalls. Being aware of these during the decision and planning stages can help you avoid them as you move forward with your plan.
Valuable information to Consider
Formation
The formation of a franchise business model involves following both federal and state requirements. The Federal Trade Commission enforces the Federal Franchise Rule, while the state rules follow the Ohio Franchise Act.
Compiling Sufficient Capital
Underestimating the amount of capital needed to get started is a common pitfall for those considering franchising or licensing options. New franchisees can fail when under-capitalized.
The first year is challenging since you must create the franchise system and support initial franchisees, costs that exceed fees and royalty revenues at the start. By working with a KJK restaurant franchising attorney, you’ll understand the capital needed to get started and build your franchise.
Establishing a Solid Infrastructure
New franchisors often neglect to focus on the systems, procedures and support needed for a new franchise. Grow too fast without these solidly in place, and you may struggle to provide the support needed by your franchisees. KJK evaluates what you currently have and recommends how to successfully move forward.
Identifying the Best Franchisees
The quality of your franchisees is essential to your business, and finding the most qualified ones can be challenging. Competition may be fierce, and KJK can help you recruit the best franchisees for your business.
Getting Help Navigating the Process
The restaurant franchising attorneys with KJK help clients navigate the process from design to formation to fundraising to overall management. We offer the following services for those creating a restaurant franchise:
- Formation documents: KJK offers all-encompassing plans, starting with your franchise business’s creation or formation documents.
- Fundraising strategies: Fundraising efforts and strategies for raising capital, accompanied by negotiation with investors and insertion of founder protections in operating agreements.
- Brand collateral: KJK helps you navigate the building of brand collateral, from logos to social media packages, to make you stand out. This will help you attract the best franchisees in both the short and long-run and create a trademark customers can instantly recognize.
- Intellectual property: KJK can help protect patents, trademarks and copyrights through management, licensing and strategic agreements.
- Project coordination: Successful coordination of a timeline to market and to meet launch goals.
Website setup and design to help draw in potential franchisees.
Unsure of where to start?
KJK Helps Clients Navigate the Process
KJK assists both emerging and existing restaurants in developing their franchise model. From fast food concepts to full-service restaurants, our experienced franchising attorneys help you take that next step and achieve more in your business.
The restaurant franchising attorneys with KJK help clients navigate the process from design to formation to fundraising to overall management. We offer the following services for those creating a restaurant franchise:
Formation documents
KJK offers all-encompassing plans, starting with your franchise business’s creation or formation documents.
Fundraising strategies
Fundraising efforts and strategies for raising capital, accompanied by negotiation with investors and insertion of founder protections in operating agreements.
Brand collateral
KJK helps you navigate the building of brand collateral, from logos to social media packages, to make you stand out. This will help you attract the best franchisees in both the short and long-run and create a trademark customers can instantly recognize.
Website setup and design
To help draw in potential franchisees.
Intellectual property
KJK can help protect patents, trademarks and copyrights through management, licensing and strategic agreements.
Project coordination
Successful coordination of a timeline to market and to meet launch goals.
Two major routes:
The difference between Licensing & Franchising
In licensing, you create a legal relationship that is limited in overall scope and relates to a particular technology or a trademark’s specific usage. Franchising differs from licensing because it involves a defined control relationship, where the underlying business must comply with designated procedures and systems of a parent company.
Common reasons for exploring the franchising option are you want to expand and grow your brand, such as through additional outlets and in various service locations.
Consider licensing if you wish to use or benefit from someone else’s technology, trademark or other legal right. An example of this is co-branding opportunities which can be beneficial in the restaurant business.
Things to Keep in Mind for Potential Franchisees
Renewals
Franchise agreements expire, usually in 5, 10, 15 or 20 years. When this period ends, the franchisee needs to decide whether to renew the agreement. A franchising attorney can ensure you thoroughly understand any new terms including in the renewal agreement.
Terminations
As a franchisee, you have the right to terminate an agreement under certain circumstances. These include the franchisor failing to provide adequate training and support as outlined in the agreement, misrepresenting potential profits or committing fraud and failing to protect your business territory or opportunity.
Brand standards
The franchisor will supply you with a document or manual containing information surrounding the standards you must follow in the operation of a franchised business. It includes specific guidelines and rules, style guides and a list of procedures or processes to follow. This is the way the franchisor protects the brand overall.
Franchise sale
The franchise sale is a business arrangement where the franchisor licenses or grants the franchisee particular rights and authorities. This includes the right to sell their services, goods and products and grants rights to use the brand name and associated trademarks. A franchise sale can take up to 20 weeks.
Franchise litigation
Franchise litigation may occur for several reasons, including territory disputes, financial disclosure or compliance issues, as well as franchise agreement and termination disputes.
Don’t Settle For Less
Contact KJK Today
Franchising is a unique business model which can be highly successful when created and managed efficiently. The restaurant franchising attorneys at KJK work closely with new and existing franchisors and also franchisees, from formation to management.