Paths to Growing Your Business Across the State—or the Nation
For many business owners, the dream doesn’t stop at a successful single location. The next natural question is: How do I take this further? Expanding from one storefront to dozens—or even hundreds—requires a smart legal strategy tailored to your business model, growth objectives, and risk tolerance.
In this post, we explore the primary legal avenues for business expansion, including self-expansion and various third-party arrangements like franchising, licensing, joint ventures, and distribution agreements.
Self-Expansion
What It Is:
You open and operate additional locations under your full ownership and control.
Capital Involved:
High. You bear all real estate, build-out, staffing, inventory, and operational costs.
Pros:
Complete control over brand, operations, and culture.
All profits stay with you.
Ideal for businesses needing strict quality control.
Cons:
Growth is limited by access to capital and management capacity.
Higher risk exposure—you’re on the hook for every lease and liability.
Slower scaling compared to leveraged models like franchising.
Joint Ventures or Partnerships
What It Is:
You partner with another person or entity to jointly operate a new location or line of business.
Pros:
Shared financial burden and risk.
Brings in local expertise or complementary resources.
Cons:
Shared control can lead to conflict.
Joint venture agreements, partnership agreements and/or operating agreements must be carefully drafted to avoid misunderstandings and plan for the future.
You may still bear liability depending on structure.
Distribution Agreements
What It Is:
You enter into contracts with third parties to sell or distribute your products under their own business names.
Pros:
Low overhead and fast entry into new markets.
Retain ownership of your brand and IP.
Cons:
Limited control over marketing and customer experience.
Profit margins may be thinner than direct-to-consumer models.
Licensing Agreements
What It Is:
You grant another party the right to use your trademarks, technology, or proprietary systems—typically in a specific context, industry, or geography.
Pros:
Passive income potential.
Useful for product lines, brand collaborations, or limited market entries.
Cons:
Risk of brand dilution or misuse.
Requires robust contracts and monitoring.
Not ideal for service businesses or those dependent on customer experience consistency.
Offering Business Opportunities
What It Is:
You allow others to start businesses using your system, brand, or products, but not under a full franchise agreement. These arrangements are regulated under “business opportunity” laws in some states and by the FTC in certain cases. It is important to be cautious and mindful that you do not illegally franchise when offering a business opportunity or licensing agreement.
Pros:
Less regulatory complexity than franchising (in some scenarios).
Can help test expansion in new markets.
Cons:
Still subject to disclosure and registration in many states.
Looser control over how the brand is represented.
May still require compliance with federal and state laws.
Offering Franchise Opportunities
What It Is:
You license your brand, business system, and support to independent operators (franchisees) in exchange for fees and royalties. Franchising is highly regulated and requires legal compliance with federal franchise law and certain state franchise specific laws.
Pros:
Scales quickly using other people’s capital.
Franchisees are highly motivated—they’ve got skin in the game.
Can rapidly build brand presence across large territories.
Cons:
Higher legal and compliance costs up front and ongoing.
Loss of direct operational control.
Ongoing obligation to support franchisees and maintain standards.
Choosing the Right Expansion Model
Each of these models has distinct legal, operational, and financial implications. At Waldrop & Colvin, we help business owners evaluate which structure aligns with their growth goals—and then build the legal infrastructure to support it. Whether you’re opening a second store or launching a national franchise system, your expansion strategy deserves tailored legal insight.
Meet the Author
Derek A. Colvin
Derek is a graduate of Penn State Law and Old Dominion University. He started his legal career in 2009 as a prosecuting attorney before entering private practice.
Derek currently serves business clients as a partner at Waldrop & Colvin, the law department for your business. His practice focuses on SMB client legal services and franchise law.
Derek is laser-focused on delivering efficient and effective solutions for business legal needs. As a seasoned litigator and experienced business attorney set on thinking critically and communicating effectively, Derek is well-suited to advise and protect your business.
Derek often serves as outside general counsel providing transactional support for business owners. He represents SMB independent owners, as well as franchisors, and franchisees as a franchise attorney.
Primary Practice Areas: Franchising | Franchise Law (Franchisor Legal Support & Franchisee Legal Support), SMB Mergers & Acquisitions, Entity Formation and Governance, Lease Negotiations, Trademark Registration, Dispute Resolution and Civil Litigation & Outside General Counsel Support
