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Business franchises carry some risks along with opportunities

On Behalf of | Oct 2, 2020 | Franchising |

Starting a business from scratch can be a difficult process. There are many decisions that must be made in order to ensure the success and viability of a new enterprise. Though many entrepreneurs decide to put their own business plans to work, others opt to open franchises and their first endeavors into the business world.

Many franchises exist throughout Florida. From fast food restaurants to car dealerships to other entities, franchises are unique for a number of reasons. This post will generally discuss what franchises are and how they function, but no part of this post should be read as legal advice. Questions about business ownership and franchises should be directed to trusted business law attorneys.

What is a franchise?

Franchises are created when businesses grant licenses for the use of their proprietary information. For example, a restaurant may have a specific trademark, color scheme, set of recipes, and store layout that makes it familiar to consumers across the country. The restaurant may allow through the use of licenses other individuals to open restaurants that follow the specifications of the original plan. While all of the restaurants make look the same and operate under the same procedures, they have different owners.

The original owner of a business that issues licenses to others is called a franchisor. Businesses that are granted licenses to open and use the proprietary information of the originals are called franchisees. Franchisees often pay franchisors money to use their businesses’ information and to have access to their business secrets.

What to do before opening a franchise business

Opening a franchise may sound like a great opportunity for a person who wants to have their own business but there are many considerations they should make before they take the steps to start one. Before signing a franchise contract, they may want to have their trusted business law attorney review their agreement and the terms they will be bound to when they open their franchise business.