According to a reputable franchise dispute lawyer, conflicts are inevitable and should be resolved promptly to maintain the thriving of your business. Raising your grievances helps prevent future disagreements and makes the transacting parties more innovative.

Minimizing or Avoiding Franchise Disputes

Franchisors and franchisees have a role in minimizing or avoiding potential franchise disputes. Here’s a list of ways to combat common conflicts in franchising.

1. Provision of Support

Prospective buyers pay a franchise fee for support to help them succeed. In other words, franchisees expect help from the franchisor, especially if they need to be more experienced in a business. Support can include:

• Educational activities;
• Providing practical solutions when the franchisee is stuck;
• Liaising with aggrieved employees, clients, and other stakeholders, and
• Marketing the new franchise outlet, among others.

2. Adopting Feasible Goals

Research shows that adopting feasible goals improves productivity. Identify specific goals that are realistic or achievable. Your franchisee is your business partner, and you need each other to succeed.

While a franchisee may overwork to please the franchisor, they’ll likely be fatigued and overwhelmed at the end of the day. You don’t want to work with an overwhelmed or tired person because they’ll likely be unmotivated.

3. Work-Life Balance

Work-life and personal life shouldn’t mix. That said, boundaries must be defined to promote work-life balance. All work without play makes Jack a dull boy. Besides, working without resting can negatively impact your health.

Franchisees should have time to catch up with friends and family, especially on the weekends. A study on productivity at work revealed that people who take some time off their work schedules are the most productive.

4. Hiring Practices

A good hiring system should be customized to address the franchisor’s needs and attract the right candidate. Most franchisors enlist the services of human resources agencies when hiring a franchisee. A good franchisee should:

• Be experienced in running your type of business;
• Be innovative and ready to learn;
• Be a good leader and manager;
• Be open to new ideas;
• Understand the basics of finance and more.

5. Fighting Workplace Discrimination

Franchisors should teach their teams about the consequences of discrimination in the workplace. On the other hand, franchisees help their workers understand that discrimination affects everyone regardless of demographics. Respected and appreciated franchisees are happier, healthier, productive, and stay longer.

Eliminating or avoiding franchise conflicts requires effort from all stakeholders. The above-discussed ways of combating franchise disputes can help create a thriving franchisor-franchisee relationship.

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Step 1: Understand the Franchise

You want to develop a solid international franchising strategy when expanding your franchise internationally. Firstly, taking the time to understand the market you are entering is essential. This includes understanding the business environment, consumer trends, and cultural nuances that may impact your business.

It is also essential to research the franchisor you are considering working with. Make sure they have a good track record and are well-suited to help you expand your franchise into new markets.

Step 2: Understand the Market

When expanding your franchise internationally, the first step is to select the right market. To do this, you’ll need to consider several factors, including:

• The current state of the economy in your target market
• The potential for growth in your target market
• The level of competition in your target market
• The regulatory environment in your target market

Step 3: Developing a Business Plan

After you have decided on the country you would like to expand your franchise to; the next step is to develop a business plan. This may seem daunting, but with careful planning and execution, it can be done relatively quickly.

Some things you will need to take into account when developing your business plan include the following:

• Your target market: Whom are you trying to reach with your franchise? What needs does this market have that your franchise can fulfill?
• Your competition: What other franchises are operating in your target market? How will you differentiate yourself from them?
• Your costs: Expanding internationally can be costly. You will need to factor in the price of setting up shop in your new country and any marketing or advertising expenses.
• Your timeline: When do you expect to be up and running in your new country? This will help you set milestones and measure your progress.

Step 4: Selecting the Right Location

The fourth and final step in successfully opening an international franchise is selecting the correct location. This is arguably the most crucial step, as the success or failure of a business can hinge on its location. There are a number of factors to consider when selecting a location, such as:

• The target market: who is the franchise aimed at?
• The competition: what other businesses are in the area?
• Foot traffic: how many people pass by the location each day?
• Demographics: what is the makeup of the local population?
• Rent: how much will it cost to lease or purchase property in the area?

Step 5: Financing Your Franchise

The final step to successful international franchising is financing your franchise. This can be done through a variety of methods, such as bank loans, private investors, or government grants.

Bank loans are the most common form of financing for franchises. However, they can be challenging to obtain if you don’t have a strong credit history. Private investors are another option, but they can be harder to find than bank loans. Government grants are a third option, but they are often limited in scope and availability.

Consult an international franchise lawyer

When expanding your franchise internationally, it is critical that you consult with an experienced franchise lawyer to ensure that you comply with all applicable laws. Your lawyer can help you navigate the complex process of registering your franchise in another country and can advise you on any potential legal pitfalls to avoid.

When expanding a business internationally, there are many factors to consider. It’s essential to have a solid understanding of the country’s culture, economy, and business landscape. Following the steps above, you can set your business up for success when expanding internationally through franchising.

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The Federal Franchise Rule governs franchised businesses in the United States and applies to all fifty states. That said, it’s essential to consult a franchise law attorney if you’re looking forward to starting a franchise in the U.S.

The Federal Franchise Rule Explained

The Federal Franchise Rule states the standards for making a franchise disclosure and allows individual states to supplement the federal law with state-specific franchise laws. Besides the Federal Franchise Rule, Franchise laws deal with more issues, such as statutory franchise laws relating to franchise disclosure, the working relationship between franchisors and franchisees, and all matters about the review of the franchise disclosure documents.

The states where the FDD is registered with the local state are called franchise registration states. On the other hand, states are called franchise filing states, where a notice or exemption request is made with the state. States that do not require either registration or filing are called “non-registration states.”

Summary of Franchise Law

1. Federal and State Franchise Law
The Franchise Law is a combination of both federal laws and state laws.

2. Federal Franchise Rule
The Federal Franchise Rule governs the offer and sale of franchises in the U.S of America.

3. State Franchise Laws
The state franchise laws refer to each state’s statutory rules and regulations to regulate franchised businesses within such jurisdictions. If a state doesn’t have any working franchise laws, the federal franchise rule shall come into play in that state. However, most states have active franchise laws.

4. the Franchise Registration States
A franchise registration state is where franchisors should register their FDD before making a sales offer for a franchise within that state. In such conditions, franchisors are required to renew and update their FDD registrations once each year.

What Laws Govern a Franchise?

All franchise agreements should specify the primary statutory laws. Most franchisors prefer to adopt the rules of their home states. That said, the franchisor must comply with the statutory franchise laws when drafting an FDD when the prospective franchisee is a resident of the same state. Federal regulations will come into play if the prospect resides in another state. The Federal Franchise Rule does not require franchisors to register or file their FDDs with the FTC. However, franchisors must comply with federal law requirements when making a sales offer for a franchise.
The franchise law governs the working relationship between a franchisor and a franchisee. It’s essential to consult a franchise attorney to understand the franchise laws that apply to your state.

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You need a reliable and competent partner (franchisee) to succeed in franchising. In addition to seeking help from a franchise dispute lawyer, you should be able to attract and hire the right candidate to take up the role of a franchisee. So, how do you market your franchise to prospective franchisees?

How to Sell Your Franchisee to Prospective Franchisees

The following are some of the ways you can use to market your franchise to prospective franchisees:

Websites

Nowadays, if you expect to excel in business, you must consider having a professional website because that’s the easiest way of attracting prospective clients in this digital age. The following are some tips for building a professional website.

• A professional website should be easy to navigate and regularly update evergreen content.
• You must include a clear call to action on the landing page
• A good website should offer a good customer experience. In other words, customers will enjoy being on your website.
• A good website should be search engine optimization friendly to improve your ranking on search engines.

Email

Email allows businesses to communicate faster with existing and prospective clients than traditional mail. The following are some tips for using emails in the right way:

• A business email address should be dedicated to a customized URL and reflect your business’s name. For instance, if your franchise specializes in auto repairs, you can consider something like yourname@XYZautorepairfranchise.com.
• A business email should include a professional signature containing your picture, logo, name, contact details, social media links, and more.
  Blogs

Business blogs can be used to promote businesses in two ways. The first way is to include a blog page on your website where content related to your brand is stored. Here, you’ll incorporate keywords related to your business to reach prospective clients who might be searching for your products or services.

The second way is by leveraging the blogosphere. Under this strategy, you submit relevant articles to blog sites with a considerable following, which translates to an increased readership. As a result of increased readership, you’re likely to attract more traffic to your website.

Web Presentations

Technology has simplified the way people and businesses conduct and present meetings. Not long ago, you must be physically present at a meeting venue. Fortunately, web presentations allow presenter and moderators of sessions to share their content using audio and video-enabled gadgets. With web presentations, franchisors can meet prospective franchisees on the web and discuss franchise opportunities.

There are many methods of attracting prospective franchisees in addition to the ones discussed in this article. If you’re considering a franchise, it’s time to seek advice from a legal professional specializing in franchise law.

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Instead of completely stepping out from under a corporate umbrella, they looked at franchising. The two worried about the notoriously tight margins for restaurants. They looked at a drug testing franchise, but the initial investment was too steep.

A franchising mentor told them about Motto Mortgage Home Services, and Jackson and Arceneaux opened one in Oakbrook Terrace, Illinois, in July of 2020 with an initial investment of $35,000.

“People always need new places to live and are always buying and selling houses,” Jackson said. He takes rising interest rates in stride. “Interest rates move up and down, that’s what they do, that’s part of the industry.”

Jackson and Arceneaux, who had been a senior IT program and project manager and an assistant director of catering, respectively, had no experience with mortgages, but Motto Mortgage provided training and support.

“You don’t necessarily need experience in that industry in order to go into that category, the brand will train you,” said Matt Haller, president and CEO of the International Franchise Association.

In the months after the pandemic hit, many people with corporate jobs decided to strike out on their own, in what’s referred to as the “Great Resignation.” They looked for alternatives, including opening up a franchise with an established brand.

The “quasi-preneurs” opening franchises say they like the ability to buy into a proven brand name and the access to tools and operations that you wouldn’t get if you started your own small business. But franchising has plenty of challenges, too. There are a lot of rules and regulations to abide by. Contracts are lengthy and can be difficult to terminate.

The number of U.S. franchises grew an estimated 3% in 2021 to 774,965 after a dip in 2020, according to IFA. Those include big franchises like McDonald’s or 7-Eleven, but all types of businesses can be franchised, from pool cleaners to barbershops.

There are about 3,000 franchisor brands in the U.S. The IFA predicts franchises in the U.S. will grow 2% to 792,014 this year. That’s still just a fraction of the 32.5 million total small businesses in the U.S.

Franchise owners buy in with an initial fee – anywhere from tens of thousands to hundreds of thousands of dollars — to get their business, and then pay a monthly royalty percentage. In return, they get use of the brand name and marketing, and other support.

As a classically trained pastry chef, Helen Kim often dreamed of owning her own bakery. But when she decided to strike out on her own, Kim thought building a business from scratch would be “too big of a mountain for me to climb.”

While working at the Aria Resort & Casino in Las Vegas, Kim was a frequent customer at Paris Baguette. She was impressed, and last year bought a Paris Baguette franchise in the city with her sister.

While the financial requirements are strict — according to the company website, franchisees need a net worth of $1.5 million and $500,000 in liquid assets – Kim said it was worth it. While the money invested in a franchise is still at risk if the business fails, brand name recognition and franchisor support offer more of a safety net than establishing an unknown brand.

However, getting used to a franchise structure can be an adjustment. When Chris Dordell and his husband Jason Fenske decided to leave their jobs at Wells Fargo and Salesforce and open two Club Pilates in 2018 and a YogaSix studio in 2020, in and around Palm Springs, they appreciated the playbook provided by the franchisor, Xponential.

“It was appealing at this stage after being in corporate jobs for 20-plus years that we could plug into an existing model,” Dordell said.

But Dordell said following the corporate rule book took some adjusting to. There were some costs incurred while building the franchises that could have been cut, but “in keeping the consistency across the company, we were required to follow the model.”

If a franchisor changes corporate management or gets sold, a franchisee can be left in the lurch.

Tom Lee and his wife opened a home health care franchise, Home Care Assistance, in Burlington, Vermont, at the end of 2016, after Lee decided to leave his career in sales management for a large company. After initially investing $300,000 and spending three years living on savings and not taking a salary, the business began to take off.

Lee currently employs 65 caregivers and had double-digit profit increases in 2020 and 2021. But the franchisor changed ownership and starting buying back franchisees to operate them privately. In 2022 it rebranded to The Key, leaving the remaining 20 or so franchisees, still known as Home Care Assistance, in limbo.

Lee said he’s still paying a 5% monthly royalty fee, but is not getting the same support. The Key made one offer to buy the business back, but it was well below market value, Lee said.

The Key did not respond to a request for comment.

“They don’t have the personnel to support us anymore,” he said. “They’ve really abandoned the brand.”

As with any business venture, franchisees need to be aware of what they’re getting themselves into.

Mario Herman, a lawyer based in Washington that focuses on franchise litigation, said it’s important for potential franchisees to go over the contracts carefully to make sure nothing is being obscured like previous bankruptcies or a lack of profitability.

Earlier this year the Federal Trade Commission sued Burgerim, a Calabasas, California, burger chain franchisor that it claims lured 1,500 people into paying $50,000 to $70,000 in fees to open franchises without giving them enough information about risks. Burgerim promised a refund if franchisees couldn’t open a restaurant, but did not deliver, according to the complaint. Burgerim didn’t respond to a request for comment.

“If done properly, (a franchise is) great, but you have to be extraordinarily careful,” Herman said. “There is a lot of fraud out there.”

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4 Signs that Master Franchising isn’t Your Thing

The following are some signs that you may not excel in franchising.

1. Lack of Commitment to Franchising

Running a business is time-consuming, which may be amplified by the complexity of managing a franchise. Attributes that make success more accessible include being a self-starter, passionate, and investing the time to grow your business. If you discover that you lack the above-listed qualities, then a master franchise may not be for you. The dream of running a master franchise may be appealing, but is it what you’re looking for, and do you have the capacity to dive in fully?

2. You’re not a Leader by Nature

If you dislike teaching, leading, and managing and prefer more hands-on roles, master franchising may not be ideal for you. The truth is that master franchising involves a lot of teaching and training franchisees and employees in the designated market. You should possess listening and speaking skills to excel as a master franchisee. Also, you must be a leader by nature to achieve the following:

• Setting an example to employees;
• Building strong working relationships;
• Inspiring passion and dedication to others;
• Displaying patience;
• Exuding confidence;
• Executing a clear vision and having an excellent strategy to meet goals.

Leadership skills are required to manage a franchise or a business– meaning you’ll not be interacting directly with customers and doing the work on the ground.

3. Lack of Capital

Investing in a master franchise is expensive and requires significant finances. In other words, the costs of establishing or buying a franchise are typically high, but they vary by franchise. It would help to consider whether you have the finances to start up, run and keep a master franchise afloat. Also, remember that you do not need to over-invest because you’ll be setting yourself up for failure in the long term. Don’t spend all your hard-earned cash on what you cannot afford.

4. Lack of Patience

Patience is vital when running any business, considering it may be a while before you start realizing profits. Also, you should not only be ready for profit but also losses. The important thing is to know what to do in every situation.

Franchising is not for everyone, so it’s always advisable to consult a franchising attorney if you’re considering buying or establishing a master franchise.

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Review the Franchise Disclosure Document

Buying an existing franchise business requires following a franchise agreement like the previous owner. You must sign a contract even though you are investing in an existing franchised entity. So you want to review the FDD and understand your obligations, duties, and rights as a franchisee because the business terms control your life for all years you wish to remain a franchise owner.

Have Your Franchise Lawyer Review the Franchise Agreements

Buying a new or franchised business involves many legal elements that only an experienced franchise litigation attorney can understand. Have them review all purchase and franchise agreements before you sign them. Also, your attorney is the bridge between you and the franchisor should you have issues and disagreements.

Ensure the Franchisor Approves the Transfer

All FDDs state that franchisors have the jurisdiction to approve your buying of a new or existing franchise. The transaction is canceled if they refuse to support you at the new franchise owner or of the transfer. The odds are that you are left in a worse state than when you began if the franchisor does not approve of the transfer.

Evaluate the Business Performance

If you cannot purchase a house without knowing its value, you should not buy a business without knowing its value. When investing in a business, you want to ensure that you understand its actual weight. Valuation does not mean asking the price and negotiating a lower price. Value could include the type and quality of existing equipment, current inventory, or business goodwill.

An ideal way of valuing a business is hiring a business evaluator. Also, the existing franchise seller could seek help from their accountant to offer valuation services. It would help to decide whether you trust the value or need to hire valuation services.

Know the Franchise Owner’s Reason for Selling

No business person wants to buy a business that is about to close down or situated at a location without traffic. Also, you want to know the industry’s status to ensure it performs well. Be sure to ask the franchisee why they are selling their business. The business owner often wants to retire, is battling a chronic disease, or has other personal reasons.

Ask for Financial Statements

Buying a non-performing business is a blunder you do not want to make. Ask the business owner to show you a financial statement of at least three years. Look for an accountant to help you review
These are some tips that could go along with purchasing an existing franchise. Buying an existing franchise business has several different aspects that must be addressed. Before signing the purchase agreement and FDD, you want to analyze the franchisor, review financial statements, and, most importantly, involve your lawyer in all purchase stages.

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