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Considering the benefits of franchising

Entrepreneurs and business owners in California might be interested in considering the benefits that franchising offers. Franchising involves a franchisor allowing a franchisee the right to use a trademark, trade name, brand, concept or business model under specified terms and conditions. Under a typical franchise agreement, the franchisor will provide an array of resources that may include assistance with obtaining financing, training, marketing and other aspects of the operation.

The franchisee will rely on the expertise, guidance, site location and other assistance that the franchisor may provide. The franchisee will be required to make the effort necessary for making the proven model a successful venture. In a typical franchise arrangement, the franchisee will pay an initial franchise fee and also make periodic payments to the franchisor, which payments are in many cases expressed as a percentage of sales.

The franchise agreement governs the affairs being conducted between the two parties. In most cases, the goods that the franchisee sells will be manufactured by the franchisor or by suppliers that are approved by the franchisor and that are specified in the franchise agreement. The franchisor may set quality and performance standards as a means to protect the reputation of its trademark or brand from detrimental business practices of individual franchise owners.

Franchises are often ideal for individuals or groups who are interested in running a business but are concerned about the uncertainty of starting a new one. Those who are interested in finding out about this type of commercial transaction can benefit from consulting an attorney who has experience in this area. It is important for a prospective franchisee to review the terms of the proposed franchise agreement and to perform due diligence on both the background of the franchisor and the results of its current franchisees.

Source: FindLaw, "Buying a Franchise: Overview", accessed on Jan. 13, 2015

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