Looking to Expand Your Business? Start a Franchise
One way some business owners can increase a successful business is by turning their business into a franchise system. However, business owners need to understand what it means to create a franchise.

December 14, 2011 /24-7PressRelease/ -- Reveling in the satisfaction that you've started a successful business is priceless, especially when your business really begins to grow and expand. One way some business owners can help this continued success is by turning their business into a franchise system. However, business owners need to understand what it means to create a franchise and become a franchisor.

What Is a Franchise?

Franchising is generally defined to mean a method of expanding a business by licensing its trademark and business system to a franchisee who pays the franchisor a fee for the right to operate using the franchisor's business system and trademark. The franchisee conducts its business operations in accordance with standards and specifications the franchisor establishes. Along with the right to use the franchisor's trademark and business system, franchisors will typically provide franchisees with pre-opening training, post-opening training and overall support.

In New York, a franchise is defined to mean a business arrangement that includes, at a minimum, any two of the three prongs described above (license of business system, license of trademark and payment of a fee). Under the New York definition, many business arrangements may be deemed to be a franchise without intending to be one.

There are many different types of franchises in the U.S. such as fast food restaurants, automotive parts and services providers, health and fitness businesses and financial services providers.

How to Start a Franchise

There are many considerations you need to think of if you want to turn your business into a franchise. Some of these include:

- Legal documents: Franchise companies need to provide certain documents to franchisees. The standard disclosure document that franchisors must give to franchisees before any money is exchanged is called a Franchise Disclosure Document (FDD), which gives the franchisee 23 categories of information about the finances and operation of the business. Many states also have specific registration or notice requirements. Franchisors usually seek the assistance of a franchise attorney to help prepare and file these documents.
- Financial documents: Franchisors are obligated to provide audited financial statements prepared by an accountant in order to operate as a franchise. These statements are included in the FDD.
- Documented and replicable systems: A franchisee is looking to purchase the rights to use a successful business model. So a potential franchisor needs to be able to provide training systems to fully educate the franchisee on how the franchise needs to run to mirror the success of the original business.

Turning a business into a franchise can be richly rewarding, but it takes a great deal of work. It also takes the assistance of other professionals to prepare the necessary legal documents. If you are considering turning your business into a franchise, consider speaking with an experienced franchise lawyer who can advise you about the steps you need to take.

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