Many people dream of finding financial success by owning their own business, but too many of those people stop short of attaining that dream because of the obstacles along the way. Starting a business is risky, and the only way to mitigate that risk is to find a business plan that works. Most new businesses have untested plans, so only the people who are willing to bear high risks take the plunge. Franchises are an exception, since they come with a business plan that has worked many times in the past and a set of products that haven proven to be popular on the market.

Many aspiring entrepreneurs choose to purchase a franchise because of those benefits. That popularity attracted the attention of legislators, who have written plenty of laws that regulate franchises at both the federal and state level. Most of them deal with the details of contracts and documentation, so it’s rare for any new franchisees to have any problems with them, but it’s still important that they be familiar with the laws, just to be safe.

Rules and Regulations

wisconsinThe most important rule that governs franchises is the Franchise Rule, which comes from the Federal Trade Commission. It applies in every part of the United States, and it controls the basic relationship between the person who offers the franchise, called the franchisor, and the person who purchases it, called the franchisee. The most important part of the rule is the section that establishes the minimum requirements for the disclosure of information about the franchise. The mandatory Franchise Disclosure Document provides important information about the franchise to potential buyers, and several states require franchisors to either expand on the document or to file a copy with the state government before they can offer their franchise for sale.

Wisconsin is on of the registration states that requires the franchisor to file a copy with the state. This requirement is not terribly relevant to the average franchisee, but it does mean that they can check the state’s records to make sure that all of the information that they are being offered is legitimate. Local taxes, business registration laws, and industry regulations are significantly more important to the average franchisee, since they are just as binding on franchises as on other businesses. Every new franchisee should thoroughly investigate the local laws and take any questions to a lawyer that specializes in business law to prevent legal problems from developing.

Locations

location13The success or failure of a franchise is determined as much by its location as by any other factor. The people who live in different places have different needs, and only businesses that can meet those needs have a chance of turning a profit. In the case of Wisconsin, it is best to divide the state into rural and urban sections. The individual cities and towns in each group have broadly similar business environments, but the details can still vary significantly from one place to the next. Every franchisee needs to narrow down their options and then examine each one thoroughly, but the divide between urban and rural regions provides a reasonable place to start.

Rural areas have relatively low populations and minimal commuter traffic, so a franchise needs to appeal to most of the local people to find success. That rules out most specialized businesses that only appeal to a narrow interest, since they won’t have enough interested customers in most rural areas. Businesses that offer products that most people need to purchase on a regular basis, like food or gasoline, can expect to do well in these areas.

They can also do well in cities, but the larger cities can support more niche businesses due to their increased population and their ability to attract commuters. Milwaukee, Madison, and Green Bay are the only cities in Wisconsin that are home to more than 100,000 people, and they offer the most opportunities. A large number of slightly smaller cities, including Kenosha, Racine, and Appleton, also have large populations that can support those businesses. Franchisees should make sure that they don’t face local competition within the city, but they each have enough people to support niche businesses without too much difficulty.