Business 101: Incorporating a Business Franchise

The truth is, buying a franchise is one of the fastest ways to start a business, regardless where you are in this country. It is fast because the business immediately gets up and running based on a proven model, good support from the franchisor and an established marketing strategy on how to bring in customers.

It is important to know that along with the benefits of getting a franchise is acquiring the risks that go along with it. In order to protect yourself from the liabilities that come along with becoming a franchise, here are some tips to keep in mind:

1. Incorporate Your Business as Soon as Possible

Most of the time, franchisors advise their franchisees to incorporate a new business to represent the franchise. This should be done way before the franchisee signs the franchise agreement. In the United States, most franchisors prefer to sign contracts with companies that are already established rather than with sole proprietors. Besides that, incorporating a business early also reduces the franchisee’s liability, as well as increases the credibility of the main franchise company.

2. Make Sure All Locations Are Covered

Some franchisees have multiple units of one franchise business and have them operate at different locations. To avoid legal issues, it is best that a franchisee incorporate his or her company properly. This way, even though the units are in different locations, they form a single corporate entity.

3. Be Aware of the Requirements of the State

Different states have different requirements when it comes to incorporating a business. If your business franchise is in a different state from its parent company, it is important that you check your state’s requirement for business incorporation. Franchisors will not provide this information to you. It is your responsibility to incorporate your business according to the requirements of your current state.

4. Always Be Prepared For The Worst

The reason buying a franchise is one of the easiest ways to start a business is because there is already an established business model to follow when you begin yours. Every new franchise is expectant that their business will be just as successful as its parent company. Although this is sometimes true, keep in mind that not all franchised businesses succeed. There are well-planned businesses that still end up with huge financial losses and even lawsuits. Protect yourself by making sure that your franchise is properly incorporated. When a business incorporates, the law views it as a separate entity from you. If the corporation does get into problems and lawsuits, you can be sure that personal assets are protected.

5. Seek the Assistance of a Corporate Attorney in Orange County

Running a business has many legal implications. In order to protect your business franchise from various legal problems in the future, it is wise to seek the help of an incorporation attorney in California so that you can sure that all the processes involved in incorporating a business are done properly.

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