Successful small businesses can grow by franchising

Posted on August 10, 2010 by Franchise Gator Admin

Many small business owners look for ways to expand, and starting a franchise is one way to generate growth.

“Virtually any business that generates a recurring stream of income from a large customer base has the potential of serving as the model for a turn-key operation,” writes David Pratt, a franchise law attorney, in the Fort Worth Business Press.

Pratt notes two keys to remember when deciding if a small business can be transformed into a franchise model.

First, steps must be taken to protect “intellectual property.” Logos, operations, procedures and branding all may need legal protection.

Second, franchise start-ups must comply with state and national laws. Pratt writes that this often entails licensing fees in different states, as well as releasing a Franchise Disclosure Statement. This includes information on various aspects of the business, such as financial data and fees that franchisees are required to pay.

In the 1850s, Isaac Singer was among the first to try to franchise his product: the Singer sewing machine. General Motors, Rexall, and Coca-Cola were franchises of the early 20th Century, but the franchise model didn’t really expand until the 1960s and 70s.