A "franchise" refers to obtaining the licensing rights to use a particular business name and method of operations. A "franchisee" is the local business, while a "franchisor" is the main company.

Is a franchise a good idea?

That depends on you and the franchisor. In theory, the franchisor has already established its business name and has a proven business model. Some franchises are more developed than others and carry more name recognition. Others are younger businesses that have less structure and less recognition. As a franchisee you need to determine the value of these items to you.

When you form your own business, you make all the decisions. You can change your menu, redecorate, and stock whatever items you believe will be needed. When you purchase a franchise, you are limited in your authority. The décor of your business, the inventory you carry, and the way you conduct your business may be controlled by the franchisor. Additionally, as a franchisee, you pay the franchisor a percentage of your sales for the use of their name and business model and, sometimes, advertising assistance.

If you value the name recognition and proven business model, you may be willing to pay the fees, which can be substantial, associated with a franchised business. If you desire more freedom, or don't think that the franchisor has much to offer, you may want to start your own business instead.

All franchisors are required to provide a Franchise Disclosure Document (FDD) before you sign any contract. This very detailed document contains background information and a copy of the proposed franchise agreement. It is imperative that you read and understand these documents before you sign any contract. At The Falcone Law Firm, P.C. we can review these documents and explain your legal rights and obligations. If you need help, please call our office to schedule an appointment.

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