How do you sell franchises?

Selling a franchise is much different than selling the underlying product or service (like a Pizza, or a tax return). Unless the company is schooled in franchise marketing, the task of selling a franchise can easily become frustrating, as in not selling any franchises. Or, franchises may be sold to inappropriate persons, setting up the franchise company for a slew of problems and excessive hand-holding that may even lead to franchise litigation. Disgruntled franchise owners very often file a lawsuit to recover damages, included their total investment to date.

There are two practical ways to gain franchise marketing expertise. The first, and most expensive, is hiring an outside person with franchise marketing-management experience to join the management team. This usually involves spending a six-figure amount on a yearly basis to pay for these services.

The second, more practical way, is to enroll in a franchise marketing workshop taught by a seasoned franchise expert with many decades of experience in the subtleties of selling franchises.

The process of establishing a franchise and "selling franchises" is also regulated by both federal and state law. Prior to advertising, selling or offering the sale of a franchise, a franchisor must comply with the "Federal Franchise Rule" (16 CFR 436, 437) respecting the disclosure obligations of a franchisor. The primary obligation of a franchisor - prior to selling a franchise - relates to an extensive written disclosure document (known as a "Franchise Disclosure Document" or "FDD") that must be continuously prepared, updated and given to prospective franchisees prior to the offer or sale of a franchise. In addition to federal regulation, there are various franchise registration state laws that require franchise companies to register and file their FDD with a local state agency. Additionally certain states maintain various franchise and business opportunity laws that must also be considered and complied with. Prospective franchisors - prior to offering or selling a franchise - need to consult with a qualified legal professional to prepare the appropriate "franchise disclosure document" and to ensure that each particular states "registration" and/or regulatory requirements are satisfied.