According to recent reports, there is expected to be more than 750,000 franchised outlets in operation in the United States by the end of 2013.  Amongst these reports includes that of the International Franchise Association which estimates that these franchises will generate more than $800 billion in sales, and employ over 8 million individuals.  Essentially, franchising is a huge portion of our economy today, making up about 3.4% of the U.S. Gross Domestic Product.

So it’s apparent that franchising is a substantial portion of the economy in America, but why?  Here are a few of the reasons so many people are gravitating toward franchising as their new career:

1.  Franchising creates better brand recognition.  The general public typically feels more comfortable purchasing goods from companies whose brands they are familiar with and recognize.

2.  Reduced fear in starting a business.  Many people dream of owning their own business, but the proposition of actually doing so can be frightening; they fear the risk involved.  With a franchise, an individual can own a business that is already successful and established, reducing the likelihood of failure.

3.  Almost unlimited potential for growth.  The US economy is huge; not only in our own country, but in other economies around the world there is almost unlimited room for more franchise outlets to be established in both competitive and single brands.

4.  Market power.  Because most franchises are recognized, it’s possible to keep costs at a minimum due to the ability to negotiate better leases and supply arrangements.  Ultimately, this allows consumers to enjoy lower prices, and the franchise to enjoy a profit.

5.  Entrepreneurs are naturally motivated to work hard toward success.  In most cases, individual owners are entrepreneurs who are highly motivated to generate profits by providing quality products and services.  Franchisors and franchisees alike work diligently to ensure their businesses succeed.

6.  Competition results in a constant growth in franchising.  New ideas and concepts lead to the creation of new categories of services and goods.  In other cases, individuals may improve on concepts that already exist, making them unique in some way.  This ultimately means that more options and variety lead to additional franchised outlets, meaning more opportunities for those interested in the franchising business.

At Spotora & Associates our Los Angeles business attorneys have extensive experience in the area of franchising.  From incorporating and review of franchise agreements to legal compliance, purchase and sales agreements and product/service distribution agreements, we are prepared to help individuals navigate the intricacies of franchise law.