Roy Hibberd

Your Business is Poised for Real Growth — Is Franchising Your Business Concept a Viable Option for You?

Ansell Grimm April 29, 2024

If you are a successful small business owner, you may know the feeling. Things are going well, and your concept seems to have drawn consumer interest and found traction. Your customer base and revenues are growing, and demand is exceeding your capacity to keep pace. All signs point towards expansion and scaling up. You start to consider your options for growth, and franchising seems like an attractive way to transform and grow your business to a regional or even national brand and presence.

And while you may generally know what a franchise is – you likely patronize and drive by multiple franchised businesses every day – you have only the haziest idea of what starting and operating a franchise involves. Even less clear is whether franchising makes sense for your business model and long-term goals or whether other paths may better suit your circumstances and objectives.

While the decision as to whether, when, and how to expand your business is one that you should only make in consultation with experienced counsel, here are some basic facts and considerations about franchising that can help guide your next steps.

What Does It Mean To Franchise a Business?

You started your business as an entrepreneur, and at its core, franchising is an approach that allows other entrepreneurs to follow in your footsteps and take the laboring oar in expanding your brand’s footprint. It is a symbiotic arrangement that offers benefits for both the franchisor/parent company (you) and the franchisee (the individual or entity buying the rights to operate under your brand).

While franchising, like any business model, comes with risks and is not necessarily appropriate for every enterprise, it is a well-established and widespread arrangement. According to the International Franchise Association, there were over 800,000 individual franchise establishments in the U.S. in 2023, employing approximately 8.7 million people and producing roughly $860 billion in economic output.

When a business is franchised, the franchisor grants the franchisee the right to use its trademarks, branding, and operational procedures. This includes everything from the products or services offered to the interior decor of a retail location and marketing materials. Franchisors provide extensive support to franchisees, including training programs, operational assistance, marketing support, and access to proprietary systems and resources.

However, while the franchisee gains access to these assets, they must comply with strict standards set forth by the franchisor to maintain consistency across all locations. Franchisors exert significant influence over various aspects of the franchisee’s business operations, including pricing, product offerings, branding, marketing strategies, and quality standards.

For the franchisor, a franchise arrangement is a means to rapidly expand its brand footprint with minimal capital investment and without bearing the full burden of establishing and managing each new location. The franchisor earns revenue through franchise fees, ongoing royalties, and possibly even sales of equipment or supplies to franchisees. Additionally, since franchisees are responsible for day-to-day operations, the franchisor can focus on core business activities such as innovation and brand development.

What Is the Difference Between Licensing a Brand and Franchising a Brand?

Owners looking to grow their brand and business may consider licensing rather than franchising. However, there are significant differences between these two models, primarily regarding the licensing company’s level of control and involvement with the licensee, — the entity receiving the right to use the brand and related processes and procedures.

Like franchising, licensing involves granting permission to use a brand’s name, logo, and intellectual property for specific products, services, or applications. In exchange, the licensee pays upfront licensing fees or ongoing royalties based on sales volume or brand usage.

Unlike franchising, a licensing arrangement does not involve providing the licensee with a complete business model or operational support. While licensors may offer limited support to licensees in terms of branding requirements, marketing materials, and quality control standards, licensees typically have far more decision-making autonomy than franchisees, which means licensors have far less control over quality or how their brand is being used than they would in a franchise arrangement.

Importantly, the legal and regulatory challenges involved in franchising are significantly more complex and burdensome than licensing. Franchises are heavily regulated and scrutinized and involve detailed and specific offering requirements for franchise disclosure documents, agreements, and operating manuals akin to those associated with offering securities. The Federal Trade Commission regulates franchising across the U.S., and 14 states have their own additional requirements. Franchisors must also provide ongoing support and guidance to franchisees to ensure compliance with all applicable laws and regulations regarding everything from employment to health and safety standards.

How To Look at Your Business When Considering Franchising

As noted, franchising may not be the optimal path for all expanding businesses. As you consider the suitability of franchising, consider these factors:

Established and Proven Concept: Your business should have already demonstrated success as an independent venture with a track record of profitability and a distinctive concept that offers a competitive advantage.
Registered Brand: Your brand/logo should be nationally registered, and as this process will take at least 12-18 months, this should be done early.
Scalability and Standardization: Your concept/model should be capable of having well-defined processes, systems, and operational procedures that can be easily replicated across different locations, markets, and economic conditions without losing the core essence that made it successful. Documented manuals, training programs, and support mechanisms will be essential for maintaining consistency and facilitating franchisee success.
Market Demand and Growth Potential: Carefully analyze the market demand for your product or service and evaluate the competitive environment to determine whether it is saturated or has room for sustainable growth.
Profitability and ROI: You can’t evaluate franchising without crunching the numbers and assessing your concept’s potential profitability and return on investment (ROI). Calculate the initial investment required, ongoing operational costs, and projected revenues.

In our next post, we will discuss the first practical steps to take when launching a franchise and how you and your attorney can position your business for sustained growth and success. If you would like to discuss franchising or other avenues for expanding your business, contact Roy Hibberd at Ansell Grimm & Aaron.

Roy Hibberd Sets Up Innovative Fitness Center Founder for Franchising Success

Ansell Grimm May 12, 2023

Ask personal trainer and fitness center owner Anthony Kapasakis to develop a training and fitness program for you, and he will enthusiastically put together an intense and personally tailored plan perfectly suited to your experience and goals. But if you’d asked Anthony in 2021 for his plan to grow and expand his group of four innovative and increasingly popular New Jersey fitness centers, he would have been far less pumped.

“I had a general idea of what I wanted in terms of growth – empowering my managers to ultimately take over and own their locations, building strong ties with the communities we operated in, developing a strong brand, and keeping a consistent company culture and member experience,” said Anthony, founder and owner of SETS Hybrid Training. “But I didn’t have any real sense of how to accomplish those things. That all changed when I met Roy.”

Both as a lawyer, a corporate executive, and a franchise area development owner himself, Ansell Grimm & Aaron’s Roy Hibberd has played instrumental roles in the success of countless businesses in a wide range of industries, developing franchising and other strategic growth plans for billion-dollar companies and start-ups alike. He fondly remembers his first meeting with Anthony and how impressed he was with Anthony’s vision and passion for his work, his fitness centers, his employees, and his members.

A “Graduate Degree Program in Franchising”

“Anthony clearly knew the fitness business inside and out, but it was his infectious enthusiasm and genuine interest in seeing his managers and employees grow and succeed as much as his business that made me excited to work with him,” Roy said.

Anthony, who at the time owned and operated SETS gyms in Freehold, Hamilton, Jackson, and Old Bridge, New Jersey, had a very high-level understanding of franchising but was seeking to work with an attorney who could address both the business and legal issues involved. After discussing his goals with Roy, Anthony was convinced that franchising was the best way to realize his dreams for his business and that Roy was the right person to make that happen given Roy’s significant franchise expertise and experience.

“I knew next to nothing about franchising,” Anthony recalls. “Roy understood that while I was an entrepreneur, I certainly wasn’t a lawyer, and he didn’t talk to me like one. He walked me through every aspect of how things would work, what to expect, and what we needed to do and change to create a SETS franchise system. Then we got to work.”

A Better Business Owner and Stronger Company

Anthony remembers that the process of getting his company in position for expansion, in particular the development of the SETS Franchise Disclosure Document (FDD), transformed and improved the way he saw and ran his business. Working with Roy in formalizing policies and procedures, building out a business and growth plan, defining KPIs and revenue targets, and all the other elements needed for the FDD and SETS franchise system made SETS more efficient and agile and helped Anthony transform his conceptual goals into concrete, achievable plans.

“Even if we never launched our franchising plans, just the exercise of putting them together and working closely with Roy throughout the process made me a better business owner and made SETS a stronger company,” Anthony said.

Of course, those franchising plans came to fruition. In January 2023, SETS’ Old Bridge location became its first franchise, with its long-time manager becoming its first franchisee. The second franchised location in Barnegat, New Jersey, came online in March 2023. SETS is now expanding beyond the Garden State, with a new franchise soon to open in Murfreesboro, Tennessee, and plans for a location in South Carolina.

Anthony says that Roy’s business advice and legal counsel was invaluable to SETS’ success and that working with him was both enlightening and enjoyable.

“I knew I could call Roy anytime with a question or concern, and he would have my back. I continue to look to him for advice and feel like I have a true partner on this journey,” Anthony said.

ANSELL GRIMM & AARON NEWSLETTER NOVEMBER 2021

Ansell Grimm November 1, 2021

Jennifer Krimko Secures Variance for New Tesla Gallery and Service Facility

Jennifer Krimko, a Shareholder and Co-Chair of the Firm’s Land Use and Zoning Department, recently represented the property owners for the upcoming Tesla automobile gallery and factory-authorized service facility in Eatontown. The project required approval by the Eatontown Zoning Board of Adjustment because car sales are not permitted in the borough’s zoning rules. In addition to the selling and servicing of electric vehicles, the store will provide a free-standing charging station open to the public along the Route 35 corridor.

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Cannabis Law October Update

Ansell Grimm October 19, 2021

New Jersey Weekly Bar Report

On Monday, October 18, 2021, the New Jersey Law Journal’s weekly Bar Report spoke with NJSBA Cannabis Law Committee Co-Chairs Joshua S. Bauchner, Esq. (of Ansell Grimm & Aaron, PC) and Lisa Gora, Esq. (of Wilentz, Goldman & Spitzer, PA) about the legal landscape surrounding the new state law and what can be expected in the early days of this new industry. The Report includes a Q&A that touches on the new law’s impact on attorneys, opportunities for New Jersey entrepreneurs, municipal involvement, and current expected timelines. A copy of the report can be viewed here.

Cannabis Regulatory Commission Meeting

On Friday, October 15, 2021, the New Jersey Cannabis Regulatory Commission held a meeting during which they voted on and issued recommendations for applicants for Cultivator and Vertically Integrated Licenses as part of the 2019 RFA round. The Commission did not take any action with regard to applicants for Dispensary Licenses. Initially, it was expected that five (5) Cultivator Licenses and four (4) Vertically Integrated Licenses would be awarded. At the meeting, the Commission announced that they would be recommending double the number of Cultivator Licenses. The Commission stipulated that these Cultivator Licensees will need to operate for one (1) year prior to being able to begin adult-use sales. A recording of the meeting will be available on the Commission’s website shortly.

New Jersey Law Journal

On Monday, October 18, 2021, the New Jersey Law Journal published HIGH-lights: A Look at Personal Use Cannabis Rules Adopted by the Cannabis Regulatory Commission. The article, a collaboration between Zachary L. Windham, Esq., of Ansell Grimm & Aaron, PC and Lisa Gora, Esq., of Wilentz, Goldman & Spitzer, PA, focuses on the upcoming adult-use application process in light of the initial regulations released by the Cannabis Regulatory Commission. The article discusses who will receive “prioritization” in the application process and the impact of receiving such priority, as well as surmising when and what to expect for application submission window(s) given the limited details on the topic within the Commission’s initial rules. A copy of the article can be found here.

2018 RFA Awards Still Outstanding

Despite the Commission’s award of 14 new licenses to applicants from the 2019 RFA, the results of the 2018 RFA are still pending. It has been nearly three (3) years since several rejected applicants filed suit against the state due to lack of transparency and endemic errors in the scoring process implemented by the Department of Health. Last November, a three-judge appellate court vacated the initial 2018 awards and ordered the DOH to develop a new rating system for applications and to increase transparency. The responsibility for reevaluating these applications has been transferred to the Cannabis Regulatory Commission. The Commission has stated that the 2018 RFA applications are still under review. Appellants recently wrote the CRC requesting information on resolving this three-year old matter, however there is no indication of when this review might be completed.

Cannabis Regulatory Commission Cannabis Informational Webinar

On Wednesday, October 13, 2021, the New Jersey Cannabis Regulatory Commission held an informational webinar. During the webinar, the Commission briefly explained the equity and safety provisions in the initial rules as well as providing general guidance for municipalities. The Commission also discussed basic application requirements and what preliminary steps businesses can take to prepare for applying. The biggest news from the webinar was likely the Commission’s statement that Class 5 Retail License holders will be permitted to provide delivery services for their own products without holding a separate Class 6 Delivery Service License. A recording of the webinar can be viewed here.

NJSBA CLE: Latest Developments In Cannabis Law

On Thursday, October, 28 2021 the New Jersey State Bar Association’s Cannabis Law Committee will be hosting a seminar to discuss The Latest Developments In Cannabis Law, including the Cannabis Regulatory Commission’s initial regulations for the industry. In addition to the personal use cannabis regulations, there will be a panel of township officials to discuss Municipalities and Town Councils, as well as a discussion of corporate and real estate transactions; whether that be the acquisition or disposition of a cannabis operation or the real estate considerations when acquiring real property for, and when leasing to or by, a cannabis operation.

Program Chairs are Joshua S. Bauchner, Esq. of Ansell Grimm & Aaron, PC, and Lisa Gora, Esq. of Wilentz, Goldman & Spitzer, PA. Speakers will include John Barree AICP, PP of Heyer, Gruel & Associates, Jack Fersko, Esq. of Greenbaum Rowe Smith & Davis, LLP, Mollie F. Hartman Lustig, Esq. of Cappuzzo, PC, Michael A. Hoffman, Esq. of The Hoffman Centers, PC, Mayor Ryan Martinez of Butler, Morris County, Ronald P. Mondello, Esq. of Law Offices of Ronald P. Mondello, Robert E. Schiappacasse, Esq. of Sills Cummis & Gross P.C, Mayor Domenick Stampone of Haledon, Passaic County, and Sarah Trent, Founder and CEO of Valley Wellness.

For more information and to register for the NJICLE Seminar – Latest Developments In Cannabis Law click here.

Ansell Grimm & Aaron Roundup July 2021

Ansell Grimm August 12, 2021

Mitchell Ansell Featured in Industry Magazine

Mitchell Ansell, Shareholder, and Chair of the Criminal Defense Department, recently was featured as a power player by Industry Magazine in their July/August 2021 issue. This inclusion provides an opportunity to more personally know a power player who prides himself on the lasting impact and positive influence he provides to clients.

Industry Magazine covers anything and everything of interest for influential tastemakers and trendsetters across New Jersey and New York, from fashion and entertainment to lifestyle and health, to travel and business. The article is available here.

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NJSBA Submits Report & Recommendations to the NJCRC

The New Jersey State Bar Association’s Cannabis Law Committee provided the New Jersey Cannabis Regulatory Commission (“CRC”) with a report and recommendations regarding the CRC’s implementation of the New Jersey Cannabis Regulatory Enforcement Assistance, and Marketplace Modernization Act (“CREAMMA”). The report covers a broad range of topics, from macro-issues like marketplace and licensing regulations to more micro-issues related to expungements and CREAMMA’s impact on family law matters. Both Joshua Bauchner and Zachary Windham (pictured) of AGA’s Cannabis Law Practice Group, contributed to the report and recommendations. A copy of the report is available here.

Michael Benedetto Closes on Ocean Block Lot Sale

Michael Benedetto, Managing Partner and President of the Firm, who also serves as the Chair of the Commercial Real Estate Department and the Corporate, Finance, & Banking Department, recently served as counsel to the Seller in an off-market sale of a parcel of property that sits approximately 300 feet from the Atlantic Ocean in Long Branch, New Jersey. The property was the last parcel for an ocean block assemblage of just over 1.8 acres. The purchaser of the property was PV Motel, LLC, an affiliate of Kushner Companies, who reportedly intends to construct an oceanfront hotel on the site along with three other lots which make up the assemblage.

Joshua Bauchner Featured in Commerce Magazine

Joshua Bauchner, a shareholder who serves as both Co-Chair of the Litigation Department and head of the Cannabis Law Practice Group, was featured in the July 2021 issue of Commerce Magazine as part of the article Cannabis: A Growing Business Sector in the Garden State? Josh was one of several influential attorneys from across New Jersey asked to discuss what this budding industry means for entrepreneurs right now. Commerce Magazine is the flagship publication of the Commerce & Industry Association of New Jersey. The article is available here.x

Ashley Whitney Files PBA Appeal with NJ Supreme Court

Ashley Whitney of AGA’s Woodland Park office recently filed an appeal with the New Jersey Supreme Court, challenging an opinion from the Appellate Division which upheld the termination of a police officer with no prior discipline for alleged violations of the Criminal Justice Information System through his use of full-disclosure vehicle registration searches despite the police department’s failure to identify a single full-disclosure search conducted without justification.

The Appellate Division’s decision may have a lasting impact upon the law enforcement community as the performance of searches by police has not been significantly addressed by New Jersey Courts since the decision in State v. Donis, 157 N.J. 44 (1998).

The decision is especially pertinent to the issues facing police as it comes on the heels of the Supreme Court’s decision in the matter of In re AG Law Enf’t Directive Nos. 2020-5 & 2020-6, 2021 N.J. LEXIS 486 (June 7, 2021), which upheld the New Jersey Attorney General’s Directives requiring the release of the names of police officers who receive major discipline.

Seth Rosenstein Appointed as FINRA Arbitrator

Seth Rosenstein of AGA’s Woodland Park and White Plains offices was recently appointed a FINRA Dispute Resolution Services Arbitrator. Having practiced in all aspects of securities class action litigation before state and federal courts throughout the United States, as well as representing Fortune 500 financial services companies in arbitration actions brought before FINRA arbitration panels, Mr. Rosenstein will now hear disputes subject to FINRA jurisdiction — which will supplement his unique perspective and experience representing aggrieved investors and financial services professionals. FINRA representation is one component to Mr. Rosenstein’s multi-disciplined practice, which continues to include commercial litigation, cannabis law, and disputes concerning real estate and home improvement contractors.

Roy Hibberd Counsels Insurance Company Acquisition

Roy Hibberd, corporate counsel in the firm’s Ocean office, recently provided legal counsel to McCue Captains Agency of Little Silver, NJ, in its acquisition by World Insurance Associates LLC. The acquisition was announced on July 1, 2021. As a Top 100 Insurance Brokerage, World Insurance Associates’ acquisition will provide McCue the opportunity to expand their national presence while continuing to provide personalized services in Property, Liability, Life and Benefits insurances for both businesses and individuals.

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Jennifer Krimko Helps Hillel Win Expansion Approval

Jennifer S. Krimko, Esq., Co-Chair of the Firm’s Land Use and Zoning Department, recently secured approval for an expansion of the Hillel School campus in Ocean Township, as well as the construction of a new, state-of-the-art firehouse for the Township’s Fire District, at no cost to the taxpayers. The approval includes the construction of: a new, approximately 56,613 square-foot, three-story high school building; approximately 15,872 square foot addition to the school’s early learning center building; and approximately 6,725 square-foot, new fire station building. Additionally, construction of tennis courts, a basketball court, new parking, drainage structures, landscaping, and related site improvements were also approved.

You can view the video of the Board’s decision, including a digital rendering of the expanded facility here.

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Cannabis CLEs

On July 22 Joshua Bauchner participated as an invited speaker for a webinar hosted by the New Jersey State Bar Association’s Cannabis Law Committee. The webinar, The Ins and Outs of Licensing of Recreational Cannabis Businesses in New Jersey, addressed the parameters set out by the New Jersey Cannabis Regulatory Enforcement Assistance, and Marketplace Modernization Act (“CREAMMA”) and what those parameters mean for potential licensees.
The panel discussed the six classes of licensure, microbusinesses, impact zones, municipal land use, and anticipated regulations from the Cannabis Regulatory Commission (“CRC”).
Josh also moderated a CLE on August 5, 2021, as part of the NJ Society of CPA’s day-long Cannabis Conference. The panel will discuss “The Legal Lifecycle of a Cannabis Business.”

Ansell Grimm & Aaron is Hiring

Ansell Grimm & Aaron PC is seeking a Law Clerk to work in our Real Estate Department. For more information or to apply, please visit us on LinkedIn .