Yes, you’ve heard about it and you’ve seen it across all social media platforms. It’s edible cookie dough, and it’s being served from a small storefront in New York City at a (magical-looking) place called CookieDoNYC. The lines are long but people are posting pictures of their cookie dough creations on all social media platforms with comments like “Worth the wait.” When a concept is this hot and desirable with tons of press and social media buzz, how would you, as an owner and entrepreneur, capitalize on it?
One option that must be on the table is franchising the concept, i.e., expansion of your business using other people’s money. The idea that you, as an owner of a single storefront, can lay out the cash to build out multiple units across your state and then the country is often a mountain that is too tough to climb. The alternative is franchising which generally involves finding interested franchisee prospects to pay you an upfront fee and monthly royalties for the right to use your trade dress, trademarks and system to open a store or multiple stores in a defined territory.
No matter which way you slice (or scoop) it, experienced franchise professionals should be equipped to assist you with developing a solid franchise system infrastructure that can be rolled out across the country. There are three main issues that arise for startup owners and entrepreneurs that find themselves with a hot concept and people clamoring to get involved as a franchisee: (1) don’t overpay, (2) don’t waste time, and (3) don’t try to avoid the franchise laws.
First, a responsible boutique franchise law firm should be able to prepare customized FDDs and franchise agreements for you based on a free analysis of your business and proposed franchise offering. Wasch Raines and our affiliate company Franchise Formations conducts these analyses for prospective franchisors and offers flat fee pricing model for FDDs, franchise agreements, and registration in Florida and other states that require franchise registrations. The fixed fee also includes a trademark registration and corporate formation of your new franchise business. There are large conglomerates out there which charge six-figures for this service. Avoid them.
Second, franchising your business should not take more than 1-3 months at a maximum and, if you work in conjunction with your franchise lawyer by providing all the necessary information to put into the FDD and exhibits, this could be done within 30 days. After you are set up with your franchise documents and properly registered in the states you are going to be selling franchises, you will be able to distribute the FDD to prospects. You must give each disclosed prospect at least 14 days from the day you give them the FDD to sign them up formally through the franchise agreement. Some states have their own disclosure rules so it is widely advised for franchisors to give prospects at least 20 days from the disclosure date.
Third, if you find yourself speaking to a “professional” that tells you there’s a way to structure your expansion by (1) giving others the right to use your name and trademark, (2) for an upfront fee and/or monthly royalties, and (3) you would have some level of control over all locations, you need to consult an experienced franchise lawyer. In Florida, if you are offering someone else the right to distribute your goods and that person is substantially reliant on you for the goods they sell, it very well could be deemed a franchise. The illegal sale of franchises carries with it civil and criminal penalties, and a franchise system can be found even if your agreements are titled “License Agreement” or “Distribution Agreement” or the like. Please read more about the “Accidental Franchise” on our blog post “The Accidental Franchise: A Must Read for Lawyers and Business Owners.” Remember, if it walks like a duck and quacks like a duck, it’s a duck.
Whether you have the hottest concept in the country like edible cookie dough or you have a profitable business that could be replicated across the United States, you should consider franchising as a method of expansion. Speak to an experienced franchise lawyer. Don’t be afraid to ask questions. To get a free startup franchising consultation and a quote, shoot us an email straight from our website or just call (561) 693-3234 and a franchise attorney will pick up the phone.
About Wasch Raines LLP
Wasch Raines LLP is a franchise and business law firm providing a comprehensive range of services to emerging and established businesses and franchise companies in a variety of industries. Through its unique business model, the firm offers its clients the benefits of having a cost-efficient in-house general counsel and a full service litigation team. For more information, click here to contact us or call franchise attorney Adam G. Wasch directly at (561) 693-3234.
Wasch Raines LLP has has provided this article for general informational purposes only. It is not intended as professional counsel and should not be used as such. You should contact your attorney to obtain advice with respect to any particular issue or problem. Read our full disclaimer at https://waschraines.com/terms-of-use/.
