One of the most common questions about franchising is, “Does a business need to be in operation before franchising?” Legally speaking, a business does not need to be in operation in order to franchise, so believe it or not, this myth is FALSE. You CAN franchise a business that is not up and running and there have been several franchise systems that have been started in this manner.
However, the reality is that when people are looking to purchase a franchise, they want a business that has already been proven to work. They want a system they can follow without having to re-create the wheel. So even though you could legally franchise a business idea, it really goes against the fundamental reason of why people seek to purchase a franchise in the first place (learn why people seek out franchise ownership).
Franchises Are Regulated
Franchises are regulated by the Federal Trade Commission (FTC) to protect the consumer against fraud (more on franchise regulation). There are standards and regulations put in place that every franchising business must follow and these are more stringent than business opportunity laws. This is one of the reasons why franchise opportunities are considered a safer type of business model compared to other business endeavors. This gives franchise systems the additional validation people seek. There are a few other states that take this a step further (read about these states).
It’s All About The Franchise Owner
Franchises are ready-made concepts for aspiring business owners. Franchises are unique business models that have been proven to work and can be easily transplanted into other markets. Add the fact that franchises are regulated, and you have the basic ingredients for success. There are currently more than 3,500 active franchise concepts in the United States across nearly every sector, from retail to food to service based (see a list of our clients to get an idea of the different businesses we have franchised). Bottom-line is that you can have the best concept in the world, but if you don’t have the right people, your franchise system can fail. The only way your system will grow is if your franchisees are successful and happy. This is much easier to do if you give them a system to follow rather than a good idea you believe will work.
So even though the myth is false, and a business does not need to be in operation before franchising, you’re better off franchising an established business. And if you’re ready to take that step, The Franchise Maker will put the pieces all together so you can start offering franchises nationwide! Simply call us directly at 1-877-615-5177 or you can contact us and we will gladly answer all your questions.
