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Franchise Laws

What is a franchise?

A franchise is the right for either a single person or a group of people to sell merchandise or services that is within a certain location. To this day there are many different types of franchises. A lot of people believe that only fast food restaurants are considered a franchise. In that case that is not always true. There are over 120 franchises in the United States; a franchise can vary from automotive services to cleaning and maintenance, even health, fitness, financial, and many pet related services. As you continue to read below you will see some of the franchise problems that can arise either after setting up a franchise or in the process of setting a franchise up. Many Experts are available to assist those who are dealing with many franchise issues.

What are the advantages when buying a franchise?

In this day and age there are many advantages in buying a franchise. Depending on different franchise, there is a wide range of an advantage. A franchise is an excellent way for many people to own and control their own business. Some of the advantages in buying a franchise are listed below:
• Corporate Image- when talking about a corporate image what that means is when starting a franchise use a business name that many people are familiar with. Many clients are often more comfortable buying an item from either a well known name or company that they trust.
• Training- When setting up a franchise the franchisor will normally provide wide range of training and support to the franchise owner, that way the franchise owner is preparing themselves up for success.
• Savings in time- Although the franchise company has already had the business style in place, the franchise owner can now focus on operating the business and setting up for a successful business to say the least.

What is a franchise agreement?

A franchise agreement is a legal document that states the relationship between the franchisee and the franchiser, such as the rights and responsibilities. This agreement will also cover the specific responsibilities when operating the business, training, and support from the franchiser (the company). Also the agreement will include the location, the earliest period of any renewal rights, how much the franchisee will invest, and how to deal with trademarks, patents signs, and the fees that the franchisee will be responsible for paying, such as taxes; also, what would happen if the franchisee decides to sell or transfer the business; any advertising rules, termination issues, and attorney fees. There is no standard form of a franchise agreement; this is because depending on the business the terms and agreements will vary.

What is the steps on setting up a franchise?

When setting up a franchise this often requires dealing with a franchisor to learn the features of the business and how to run it. Before being allowed a franchise many individuals must apply and be approved by the company that they want to work with. Below are the steps in setting up a franchise.
1. Consider the individuals knowledge, skills and interest in coming up with some ideas on the type of franchise that they want to own.
2. Consider current financial situations.
3. Recognize any assets and decide how much money they have available to invest in this franchise. Consider any guaranteed savings or other source of income that the individual can live off of while the franchise is up and running.
4. Look into International Franchise Association sites to search possible franchises by different categories.
5. Select the franchise and move forward. If the individual has met the requirements then they will need to begin the application process. If the application is approved the individual will receive the following steps from the franchisor.
6. The franchisee will need to work with the franchisor to learn about the business, prepare the business plan to the guidelines and turn in any documents needing, the franchisee will also need training on how to run and manage the franchise.
7. Sign any legal documents about any offers that were made. Hire and train employees.
8. Final step would be to encourage the grand opening of the business in the community. Also the business owner can hire a publicist to help get the word out about the grand opening.

Is there a way to terminate a franchise agreement without losing any employees?

In this case it can all depend on the terms and conditions stated on the franchise agreement alone. Many agreements have fine print that states the rules on a termination of the agreement, rights and solutions in reaching a breach of contract, and most importantly non-competition and confidentiality agreements. In many cases the franchisee will be required to leave the entire client list with the franchisor and not contract anyone on the list for at least a year or more. There is also often a requirement on geographic restrictions such as not opening a new business within a 5 mile radius of the previous franchise.

When dealing with a business franchise many problems can arise when regarding to the franchise laws. Many Experts are available in order to help those with specific franchise or business questions. Before stepping out on your own consult an Expert first.

Ask a Business Lawyer

Law Pro
Law Pro, Attorney
Category: General
Satisfied Customers: 1779
Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
11688690
Type Your Business Law Question Here...
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3 Business Lawyers are Online Now

How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Business Lawyers are online & ready to help you now

Law Pro
Attorney
Satisfied Customers: 1767
20 years experience in business law - sole proprietor, partnership, and corporations
Dimitry K., Esq.
Attorney
Satisfied Customers: 1495
Run my own successful business/contract law practice.
MShore Law
Attorney
Satisfied Customers: 1233
Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements

Recent Franchise Questions

  • Hello, I have had a Corporation that was opened in 2011, but

    Hello, I have had a Corporation that was opened in 2011, but I never use it and never received any notice because I moved from my original address, today I recalled about that corporation because I need one for a businesses that I will open next year. I called the Franchise Tax Board and found out that I owe around 2500 in fees and penalties for that corporation which is currently suspended.
    So my question is this, what happens if I do not pay anything to the Franchise, I never used that corporation and I prefer opening a new one because is cheaper. Does the Franchise is going to pursue a payment from me for that corp? or is something that is just going to remain on that account?
    Thank you
  • There is a Florida LLC with two members. One member wants out and I want in. From what I w

    There is a Florida LLC with two members. One member wants out and I want in. From what I was told the LLC has no liabilities and has had no significant income. What is the best way to do this before the 31st this year. And how can I protect myself in case there are liabilities unknown to the current members. Finally, there is a thought to transfer the LLC from Florida to Delawere. Can this be done? Is there any benefit in doing so.
  • If I have not operated my California based LLC for several

    If I have not operated my California based LLC for several years, but still owe the annual FEE of $800 for those several years I did not operate, can that tax be pinned on the "members" of the LLC after a while.
    I was given legal advice to not dissolve the LLC, as the CA FTB can not come after the owners, only the LLC.
    Is this true, or after a pro-longed period of time, can they force the dissolution of the LLC and transfer the tax liability to the "members" of the LLC?
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