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Irwin Law
Irwin Law, Attorney
Category: Business Law
Satisfied Customers: 7013
Experience:  30+ yrs. representing small business, real estate, probate
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Second opinion] - We are a small business dance studio that

Customer Question

Second opinion] - We are a small business dance studio that has been around for 28 years. We want to setup a program where people can franchise their own dance studio locations. We don't see it getting super big, probably 1-2 locations in the next 5 years. Mostly these would be our teachers or students that would like to go out on their own, but instead can open up one of our studios and have our brand, reputation, curriculum, and management resources from our central office (to handle registrations, office admin, etc. for them). We're still far off from getting the ball rolling on this and don't have any specific prospects yet. But we wanted to at least do a "soft-announcement" by including this on our website so people know this is something we are interested in and offering before they just go out into business on their own. I've done some research on franchising, and it looks like you need to do a bunch of paperwork to get setup on this and have a disclosure document and be a registered franchise. Is that what we would need to do for this type of business arrangement? Or are there other options? Maybe franchise isn't the write word or process. Is there a different arrangement that is more appropriate? And is there anything we need to do legally before announcing this as an offering?
Submitted: 4 months ago.
Category: Business Law
Expert:  Irwin Law replied 4 months ago.

and it looks like you need to do a bunch of paperwork to get setup on this and have a disclosure document and be a registered

You have no idea how much time, effort and money you will have to expend to start a franchise. A "bunch of paperwork" doesn't begin to describe it. There is a different arrangement you might consider. That is to offer certain people who you trust the opportunity to have you assist them to open their own studio. The exact nature of your tutoring, financial investment would be negotiated on an individual basis. In the end you would own a minority interest in the new establishment to be majority owned and operated by the other people. This is a far superior, i.e. less risky arrangement from your standpoint to a franchise, which I do not believe you could get off the ground.

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Customer: replied 4 months ago.
Hi Irwin,Would we be able to do this where they are still essentially locations of our main brand? We'd like our central office to manage the registrations, marketing, office administration, etc., for consistency across all locations. If we had them give us a minority interest in the business instead of a royalty would that work around it being a "franchise" and the paperwork? Or would that still be a franchise.
Expert:  Irwin Law replied 4 months ago.

You will probably end up having to tailor each location to the needs of the partners. This is an extremely complex business arrangement to try to put together so that everyone's is protected. It can be a franchise, a co-partnership, a joint venture, a management agreement, so don't get hung up on nomenclature. What you call it is immaterial.

Also use real lawyers for this, and oh yes, you cannot use one lawyer or law firm to write this up for everyone.

I hope that I have provided excellent service and, if so, would love a 5 star rating. If not, please let me know how I can further assist you. There is no additional charge to you for rating me. A bonus is not required, but is always appreciated.

Thanks again for using JUST ANSWER.

Customer: replied 4 months ago.
I understand that we would need to have a lawyer draw up any paperwork and there would be a lot of things to work out, but in the meantime, are we allowed to advertise such a possibility and start that conversation or do things need to be setup before hand? And with advertising it, what terms are we allowed to use? Is the word franchise off the table because of registering a franchise/disclosure document requirement? Would the terminology "Studio Ownership Program" be acceptable?
Expert:  Irwin Law replied 4 months ago.

Yes. Studio Ownership Program or just plain Business Opportunity, is perfectly acceptable in advertising. Not everything needs extensive reorganization approvals and disclosures. The reason you don't use "franchise" because that denotes a particular type of business that is highly regulated, simply selling a business participation opportunity is not.

Expert:  Irwin Law replied 4 months ago.

Hello again. I hope that I have provided excellent service and, if so, would love a 5 star rating. If not, please let me know how I can further assist you. There is no additional charge to you for rating me. A bonus is not required, but is always appreciated.

Thanks again for using JUST ANSWER.

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