This article discusses on some of the most important legal documents which you must take into consideration while franchising your business.
Franchising is an age-old practice that has been the most suitable choice for many entrepreneurs to expand their business. It allows you to grow your business quickly across multiple locations by making a minimal investment, which is hardly possible in the case of other expansion methods. However, the process of franchising your business isn’t easy at all. It is so because without it involves a series of steps to be followed efficiently.
One of the major concerns faced by most of the business owners is to have the right information on the important legal documents which are required for franchising. If you are also worried about what are the documents to be prepared to ‘franchise my business’, then this article is for you. Without any further wait, let’s get started. Following here are some of the essential legal documents being discussed upon.
Franchise Disclosure Document (FDD)
It is important for you as a franchisor to prepare the Franchise Disclosure Document as you need to issue and disclose it to the prospective franchisees with whom, you might eventually sign the franchise agreement. This legal document mainly includes a list of 23 disclosure items regarding your business, franchise offering and legal obligations involved. It should also comply with the state and federal franchise laws.
Operations Manual
Another important document which, you must prepare is an Operations Manual. It is typically a confidential document which, you need to provide to your franchisees after the franchise agreement is being signed in between you and them. It will offer a complete guide to the franchisees while covering anything and everything starting from the initial training on the requirements and standards for daily operations to after sales customer service. Though it may be updated in the future with the change in industry provisions, but, the basic structure should always be maintained by franchisees.
Financial statements
Financial statements should also be well prepared to have a clear picture of your financial position. Though an opening balance sheet is the basic financial document which, you can get started with at the initial process, it is always important to consider other completely audited statements including balance sheet, statement of operations, statement of cash flows and more.
Franchise agreement
Preparing the final agreement which will solidify the relationship in between you as the franchisor and franchisees is one of the crucial tasks in the entire process indeed. This will offer the right to franchisees to carry your business while adhering to the predefined or mutually agreed terms and conditions, processes, and strategies. Some of the usual terms being included in such agreements are royalties, marketing fees, performance criteria, training to be offered to franchisees, and more.
Concluding note
These four documents mentioned above are extremely important and should be always considered before you get started with the process of franchising your business. Also, when you are looking for detailed knowledge on how to ‘franchise my business’, you can always look for experienced consultants and seek for their help to ensure that the entire process is well taken care of.
The author is an experienced consultant who has gained an impressive reputation on offering guidance to entrepreneurs who are willing to franchise their existing business concept. He likes to write blogs and articles on a number of related topics including tips to ‘franchise my business’, benefits of franchising, and more.