For business owners, having your brand present in every corner of the globe feels like conquering the world. A prime example of this is McDonald's—there seems to be no place on Earth without one. However, although every business owner loves to see their business go global, there are some legal requirements to consider.

Business owners who want to become franchises must first contemplate some legal questions. They need to understand the legal requirements and how to proceed. They also need to know about the obstacles that may stand in their way of becoming a franchise. Often, seeking legal aid is really helpful, which is where Franchising Lawyer Jason Power of Franchise.Law comes in.

This article highlights some of the things business owners need to look for to determine whether their business is ready to become a franchise.

Evaluating Your Business for Franchise Potential

The first step is to analyze the underlying factors driving your business's success. Once you identify the key reasons, evaluate whether they can be effectively replicated on a global scale. It is also essential to recognize that scaling internationally often requires setting aside your original business model to prioritize strategies that foster growth and adaptability.

In short, this means you have to scale up your franchise. This will help you transition from small business ownership to franchising.

Understanding Franchising's Legal Hurdles

The Federal Trade Commission (FTC) regulates franchising and mandates that a business use a detailed Franchise Disclosure Document (FDD) to become a franchise. The FDD is a lengthy book that can be up to 400 pages.

Compiling this book can be very costly. This is because obtaining all the needed information is difficult. You also need to draft an initial FDD before writing the final copy.

Other than the federal level, some states require you to register your business, revise the FDD, and submit it annually for review. In the US, 14 states have this requirement. Your FDD must comply with federal and state laws and carefully detail the opportunities your business seeks to capitalize on. 

Franchising Costs

Capital is a critical component of franchising. For a business to succeed as a franchise, it must effectively allocate and manage capital. Careful expense tracking is essential. Growth can be achieved organically by making prudent financial decisions, hiring skilled staff, and investing in marketing efforts. However, these steps should be taken only when the business's infrastructure is prepared to support expansion.

Industry-Specific Legal Barriers to Franchising

It is harder to become a franchise in some sectors than others. For example, becoming a franchise in the medical field may prove challenging. Stringent healthcare privacy laws are one major problem.

This makes it difficult to share data and information between franchisees and franchisors. Also, in some states, it is prohibited for medical professionals to do business with non-professionals. Thus, they may not be able to share royalties.

Franchising Locally vs. Globally: Key Legal Differences

You should know that many countries have regulations similar to those in the US. You need to worry about contract laws and how to enforce some key provisions. However, there are only minimal differences between international regulations and US regulations.

You have a reasonable chance overseas if you follow US regulations correctly. For example, countries like Canada, Australia, and Mexico require pre-sale disclosure. 

How Franchising Has Changed Over the Years

One significant change in franchising is how sales are conducted. Sales used to be conducted traditionally: hiring a salesman, selling door-to-door, or attending big trade shows. 

However, the digital world brought a change. Now, there is software for lead generation and franchise sales. SEO is another marketing disruptor. Social media, such as Facebook, is an effective medium to target your customers.

Is Your Business Ready to Franchise?

One problem with franchising is that the laws appear too archaic. This is because they have not caught up with the rapidly changing digital age. Also, many franchisers do not want to franchise in states that require advanced franchise registration.

That is because they can be penalized when they explore the market or pitch their business to someone else without pre-offer registration. However, as long as you can get it right with all of the points highlighted above, you are on your way to global business.