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An Introduction to Franchising

Four tips to starting a successful franchise.
By Cambridge Who's Who Lifetime Member and Contributing Author Harold Kestenbaum

   

My name is Harold Kestenbaum, and I am a franchise attorney. Many of you may be wondering what a franchise attorney does. I realize that franchise is not a well-known sector of the legal profession unless you work in the industry as either a franchisor or a franchisee. Here is how I became involved in franchise law.

In 1977, at my third job out of law school, I worked for a solo practitioner in Manhattan who represented many corporate clients, some of whom were publicly traded. One company happened to be a franchising company. One day my boss said to me, "Kestenbaum, I need you to learn about franchising, so that you can handle our franchise client." Not knowing what in the world he was talking about (I had done everything but franchise law up until then) I found every book I could on franchising (there was no Internet in 1977) and for the next four years I immersed myself in franchise law. When New York State passed a new franchise registration law in 1981, I decided that it was time for me to become a solo practitioner and left the practitioner I was working for. I have been practicing franchise law ever since.

I have written a book, "So, You Want to Franchise Your Business," that will be in stores on August 1, 2008, and delves into the way a company embarks on the franchise path. It includes the dos and the don'ts of franchising your business. In my book, my co-author, Adina Genn, and I discuss what makes a company right for franchising and how to go about turning a successful business into a franchise company. Here are a few key tips from my book:

  1. Have a successful model. It is impossible to create a franchise program without having at least one successful operation, a pilot, if you will. It is not feasible to think that if your core business loses money and is unsuccessful, that a franchisee will be any different. It is imperative that your franchisees be successful, otherwise franchising does not work.

  2. Make sure your business model is replicable. You must be able to build clones of your operation, otherwise, the system will not work. Have you ever seen a McDonalds without the infamous golden arches? That is just one example, but it goes beyond the look. It is the method of operation that must be duplicated.

  3. Attain capital for your franchise. You must have capital in order to roll out the franchise program. You cannot believe that franchising will cure your cash flow issues, you need to have money in order to roll out the program. Do not view the program as a way to fund an undercapitalized business model.

  4. Prove your model works! The concept that you are trying to franchise must lucrative. You must demonstrate that your concept works before you try to offer it to the public as a franchise. If the business model is a failure, your franchisees will inevitably fail as well. Franchising can be a wonderful business model, but your initial model must work first, otherwise franchising will not be possible.


Why franchise your business? Very good question, but to those of us in the business, the answer is quite obvious. If you want to grow your business beyond one or two stores, and you cannot afford to build more units at, for example, $500,000 each, then what better way to grow than to let a franchisee buy a franchise and build the unit himself or herself for that amount, and you simply receive the weekly royalty of 5% or 6% of gross revenues? Franchising is a vehicle for growth using the capital and human resources of someone else (the franchisee). How great is that? It is simple, yet complex. The franchising relationship goes much deeper than building the unit and collecting royalties. It is a starting place for companies that want to grow but do not have the internal capital or human resources, like Starbucks, to do it by themselves.

Read his interview reprinted from the Nation's Restaurant News

 

Do you want to Franchise your business?  Do you have any questions about Franchising?  Submit your question and get a FREE CONSULTATION with Harold L. Kestenbaum, he will be more than happy to contact you and go over your franchise concerns.
 




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Five Key Tips for Franchising Your Business
 

FRANCHISES

Sbarro - The Italian Eatery, Boulder Creek Steaks & Saloon, Nathan's Famous, Bagel Boss, Manhattan Bagel, New World Coffee, Dallas BBQ, Yogurteria, Hot & Crusty Bakery, Zaro's Bake Shoppes, Sandella's, Firkin's Pubs, Sylvia's Soul Food Restaurant, Crescent City Beignets, Arthur Treacher's Fish & Chips, Five Guys Burgers, Buttercup Bake Shops, Marvelous Markets, Dominic's, Sedutto Ice Cream, Yogen Fruz, Yogurt & Such, Wall Street Deli, BurritoVille, Original Ray's Pizza, Patsy's Pizza, New York Subs & Sandwich, Ranch*1, Desert Moon Café, Pudgie's Famous Chicken, New York Burrito, CoolBrands International (Tropicana Smoothie's, Swensen's, Bresler's, I Can't Believe It's Yogurt, Golden Swirl and Yogen Fruz), Eskimo Pie Stores, Gator's Dockside Restaurants, Camille's Sidewalk Café, Kudu Restaurants, Kudo Beans Coffee Cafes, Jersey Mike's, Sobiks, The Original SoupMan, Pacific Lawn Sprinklers, Zyng International, Fastbucks, Wicks 'N Sticks, Marad Fine Art, Hometown Threads, Marsha Scott's Hair Loss Clinic for Women, Lemon Tree, The HomeMag, Island Inkjet Systems, King Bear Auto Service Centers, GarageTek, Blasting Juices, Travel Network, ReCeil-It, Herman's World of Sports, , Uniforce Temporary Services, Dashing Diva, DCAP Insurance, Re-Bath, DEI Franchise Systems, The Cravery, Crown Trophy, Foliage Design Systems, Sheds Barbeque, Tech Hero, Soundbox Studios, Hand And Stone Spas, Sea Tow Services International, Medstock, Honest-1 Auto Care, Little Scoops, ShapeXpress, Coney Beach Hot Dogs, Energy Kitchen, Rockin Baja Lobster, Rustic Ranch, Fresh Berry Yogurt, Taco Maker, Angels Ice Cream, Mama Mio (Maternity Spas), New England Hot Dog, Eola Wine, Pyros Grill, Wayne Works Marine, The Gutter Guys, Tasti D-Lite, Sushi Go!, Bevinco, Rachel's Kitchen, Elevation Burgers, The Counter, Vivoli's Italian Restaurants, Creative Playthings, Maki of Japan, i9 Sports, Math Monkey, National Jean Company, Under the Sun, A $49.95 Any Sewer and Drain, Banna Strows, Bilstens Appliances, Blue Moon Mexican Café, City Wok, Clutterbusters, Clix, Froots Smoothies, Fusion Wireless, HMHTTC, Humitech, IM=Pilates, Chicken Dijon, Vapiano's, Tastings, Generous George's Pizza, Knockout Hair Cuts for Men, Sharkey's Hair Cuts for Kids, We Olive, Trick Shots Billiards, Peterbrooke Chocolatier, Prime Pubs, Whata Lot A Pizza, Zpizza, Smart Brain, Sonoma Chicken, Personal Training Institute, My Kitchen Salad Bars, Parisi Speed School, Obees Subs, Central Park, Volcano's Coffee Bar, Fetch, Nothing Bundt Cakes, Burger Hut, Brother Jimmy's Barbeque, Tommy Pastrami Delis, , Newks Restaurant, North American Hot Breads, Mr. Greek, Little Chefs, UMAC Martial Arts Centers, The CrepeMaker, TruServe Groundscare, Valdiano's Italian Restaurants, Green Cactus, Chyten Educational Services, Fotozine, The Tutoring Center, Tutor Doctor, Motion Golf and Cactus Salons.


Harold L. Kestenbaum | 90 Merrick Avenue, Suite 601, East Meadow, NY 11554
Phone: (516)745-0099 | Fax: (516)745-0293

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