Building a Secure Business Structure: Protecting Assets for Growth and Expansion

Establishing a company structure that safeguards your assets is crucial for any business, particularly if you plan to expand through a partner model like franchising, CorAlliance, or licensing. It’s wise to consult your accountant or lawyer before finalising your structure, as there are several factors to consider, including tax implications.

I'll use a franchise system as an example, but these principles apply to any franchise, CorAlliance, or licensing model. Typically, a franchise structure includes a holding company at the top, usually a non-trading entity. This holding company acts as your IP protector, owning key business assets such as trademarks, recipes, formulas, customer lists, plans, designs, user manuals, proprietary software and apps, processes, and training materials. It may also own other tangible assets like property, machinery, equipment, and vehicles.

The next level in the structure is the franchisor entity, which is responsible for selling franchises and collecting the associated fees. The holding company grants a licence to this entity, allowing it to sell franchises that utilise the trademark, systems, and other intellectual property. This structure helps keep your assets separate from the entity dealing directly with franchisees. Should any disputes or difficulties arise, your existing company will likely remain as your operating entity. Even if you don’t plan to implement a partner model such as a franchise, CorAlliance, or licensing, it's still beneficial to have your tangible and intangible assets held by a separate company from your trading entity.