An increasing number of companies are looking to franchise their operations to fund expansion. Before you consider this for your company, take a close look at the option of licensing. With franchising, you must file government franchise offering statements each year with each state you hope to operate in, which can be quite expensive. Also, franchisees are beginning to sue franchisors in increasing numbers for failure to provide ongoing perceived value relative to the fees paid.

With licensing, you offer a package, a discounted source of products and support items that they can purchase from you, the limited right to use of your logo and other promotional materials, and perhaps seminars and newsletters. In other words, some entrepreneurs find that they can get all the advantages of franchise offerings without all the drawbacks by offering licensing packages.