Absolutely! If you make $100 in profit, that $100 on the open market is worth the multiple of the earnings in the business it is generated. If you pay that $100 in royalties to the franchisor, that $100 becomes an expense to your operating unit and profit to the franchisor. By Tom Spadea
My partners and I have launched hundreds of new franchise systems over the years. One of the most difficult conversations we often must have with a new franchisor is telling them that they don’t have a protectable brand name, or that their brand name is owned by someone else. By Tom Spadea
I was asked by a franchisor client the other day what they should do if they had three good candidates for the same territory. What a great problem to have for sure and, in fact, I wouldn’t even really define it as a problem. By Tom Spadea
At some point, everyone involved in franchise development is going to be asked this question by a prospect. It is not unreasonable for a prospective franchisee to want to know the answer. By Tom Spadea
At the risk of really getting into the weeds on a very narrow issue, when was the last time you gave any serious thought to the term length in your franchise agreement? By Tom Spadea
Seems like a simple enough question. However, I think many franchisors forget they are in two businesses. One is the underlying subject matter expert on the service provided to consumers, such as a restaurant, gym, roofing, etc. But the second, and increasingly more important, as your system grows, is the business of franchising. By Tom Spadea
A decade before Spadea Lignana was named the No. 1 franchise law firm by Entrepreneur magazine, Tom Spadea was selling franchises during the day and going to law school at night. By Brianna Bohn
Founders of franchise systems spend time, treasure and pain to get their system to the point that it has significant enterprise value. Many have a numerical goal for that value and a timeline for when they want to harvest their years of hard work. By Tom Spadea
An often overlooked metric for many franchisors is the number of outstanding territories they have yet to award. For most new franchisors, selling out of territories seems like such a distant problem that they don’t give it any thought. When they think of scarcity, they think about franchisee lead scarcity. However, I would challenge franchisors to flip the equation if their goal is to maximize the long-term value of the brand. By Tom Spadea
As a franchise attorney, I have witnessed some clients go from a few locations to hundreds in a surprisingly short amount of time. All of them have strong brand name, great unit economics and solid systems, but the primary factor that seems to set them apart is the quality of teaching, advice and coaching the franchisor furnishes to its franchisees. By Tom Spadea