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If you start a franchise business as a "corporation", "company registration" is necessary!

When you quit your job and decide to join a franchise, you'll first have to choose whether to start as an "individual" or a "corporation."If you're content with just enough sales to cover your hobby, starting as an individual is probably the best option.

However, if you're "starting a business," you probably have big dreams, such as eventually hiring employees, opening an account with a large financial institution, doing business with large corporations, or aiming for an IPO. In that case, you'll need to start as a corporation.

"Incorporation" means "establishing a company," and this requires "registration of establishment."Also, there are several types of corporations, so you'll need to decide which one to choose. These include "stock companies" where the liability of investors is limited to the amount invested, "membership companies" with very strong personal ties, and "general incorporated associations" that are basically not for profit and do not distribute profits.

When leaving a corporate job to start a franchise business, in most cases, a "stock company" is chosen from the perspective of ease of establishment procedures, limited liability of investors, ease of tax treatment, and public perception.

Seven main steps in company registration

Since the new Companies Act came into effect, company establishment has become extremely flexible. The general flow is as follows.

• 1. The founders create the "Articles of Incorporation," which can be considered the company's constitution.
• 2. They decide on the company's share details, trade name, head office, specific business activities, officers, etc.
• 3. They create the company's seal.
• 4. They have the "Articles of Incorporation" certified at a notary office.
• 5. The founders deposit the capital contribution into a bank account.
• 6. They apply for registration of establishment, attaching the Articles of Incorporation, proof of investment, etc.

How much capital is needed? How many directors are required? Points to Note Regarding Company Registration

• Capital and Founders

The minimum amount of capital for a company is 1 yen. In addition, only one founder is required to subscribe to at least one share upon establishment. However, considering how financial institutions and business partners will perceive a company with "1 yen in capital" with an eye on future development, it will naturally be judged that a slightly larger amount of capital is better. Also, if the chosen franchise is related to real estate, there may be a minimum capital requirement, and it may be necessary to raise that amount by having many people invest. The amount of capital you need will depend on the type and format of the franchise you choose.

• Company Name

This refers to the name of the company. Although the concept of similar company names no longer exists, having companies with the same name in the same city or town can confuse consumers and increase the likelihood of misdelivery of mail. Furthermore, if you intentionally create a company with the same name as a large corporation, you may be sued under the Unfair Competition Prevention Act, so be very careful when deciding on a company name.Note that you can also include English letters and numbers in the company name.

• Company Officers

Before the new Companies Act came into effect, there was a restriction that "a minimum of 3 directors and 1 auditor were required," but this has now been abolished, and it is sufficient to have at least 1 director. Even if there is only one director, it is possible to call yourself the Representative Director.This also starts with summarizing your vision for what kind of company you want to create in the future. If you want to start easily, you can have one director, or if you prefer to have several officers and set up a board of directors to make decisions by consensus, then you can design the organizational structure accordingly.

• Company Objectives

This also depends on the type of business you will be conducting as a franchise. Some franchises may require licenses and permits, so be sure to check with the franchise headquarters in advance.There are many cases where companies are forced to change their registration because "this item is missing from the objectives" when they are applying for licenses and permits. If you have decided on the business you plan to conduct in the future, it is best to include it in the articles of incorporation from this stage.

• Bank Account

Since the enforcement of the Act on Prevention of Transfer of Criminal Proceeds, it has become considerably more difficult for new companies to open bank accounts. First, investors deposit the amount equivalent to the capital into an account at a financial institution they have had a relationship with since their personal days, and then apply for company registration at the Legal Affairs Bureau along with other documents, using a copy of the passbook as the "capital." Please note that it is only after the company's registration is completed and the certificate of registered matters is issued that it becomes possible to open an account in the name of the new company.

• Date of Registration

The date on which the company registration application is submitted to the Legal Affairs Bureau becomes the "company's establishment date." Please note that registration applications cannot be submitted during the year-end and New Year holidays, or on weekends and public holidays, so those who are particular about the company's establishment date should choose a weekday. Even today, many people insist on choosing a "Taian Kichijitsu" (auspicious day), so from the perspective of a judicial scrivener, we take the approach of working backward from the date of establishment and preparing the necessary documents for stamping.

・Certificate of Registered Matters

After applying for registration at the Legal Affairs Bureau, the registration will be completed in about 10 to 14 days, and you will be able to obtain a "Certificate of Registered Matters" and a "Company Seal Certificate." Submission of documents to the FC headquarters, financial institutions, and licensing authorities will be done after these documents have been obtained.A Certificate of Registered Matters can be freely obtained, for example, by a trading partner, by paying a fee.

If you quit your job and start your own business, you will take on responsibility to society as a CEO

"You have big dreams and you start a company to begin your own business." Establishing a company is not the goal, but merely the starting point.

No matter how small it may be, if you quit your job and become the CEO of a company, you should be aware that you will take on responsibility to society as a CEO.While the responsibility of investors is limited to the amount they invested, as a CEO recognized by the public, you are no longer the salaried employee you once were. You will also incur corporate tax obligations.

If you quit your job and start a franchise business, you will gain freedom, but at the same time, great responsibility will arise. Take on the challenge with high aspirations and a strong sense of responsibility.