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Successful franchising also carries business litigation pitfalls

Entrepreneurs in Tennessee and elsewhere may have the good fortune to enter an industry that is popular with the public and growing rapidly. Their company, however, may be unable to keep up with the pace of growth in the industry. It may, for example, fail to meet the fast demand for products by the consuming public. One popular and sometimes wildly successful remedy is to franchise the business model on a regional or national level.  This is a popular way for some entrepreneurs to rise to the top quickly, but the risks of business litigation along the way must be guarded against.

For those who want to achieve a far-reaching presence in an industry, franchising may be the likely answer. It boils down to a process of finding qualified partners throughout the intended geographical area to share the cost of such dynamic growth and to add the necessary labor demands that will be needed. To construct a successful franchise framework will take some very detailed work and the exercise of intensive due diligence. 

Getting the franchise to be consistent with industry standards is an important consideration. Studying the industry and emulating the most successful model will be vital. The franchise operation must be set up to be in conformance with the laws of each state in which a franchise will operate. Industry-wide associations of businesses may be a good starting point to zero in on the common characteristics of business success for the industry.

For a business in Tennessee, retaining a law firm experienced in franchise law will go a long way toward getting the project off the ground and moving in the right direction. Bringing in experts in that business sector will also be necessary to get the franchise model down to a knowledgeable and effective process for easy franchisee implementation. This lucrative and dynamic area of business growth can provide enormous success but there are challenges that can develop between the franchisee's need for independence and the franchisor's desire to keep a very tight reign on business practices that deviate from the tested and established model. The franchisor will do well to incorporate measures that will avoid precipitous business litigation between franchisees and franchisors.

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Ray Law Firm, PLLC

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