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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: 1740
Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
11688690
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    Rate the answer you receive.

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Recent Franchise Questions

  • I formed a C Corporation back in 2009 to run an export business.

    I formed a C Corporation back in 2009 to run an export business. Company did not take off and I have losses being carried over in the business tax return. I started bringing income to the company by providing business professional services under a new DBA in order to recover some of these losses. Now I have decided to purchase a franchise in the travel industry. Can I just create a new DBA and use the same company for the new business?
  • What are the requirements to register a business name as a

    What are the requirements to register a business name as a DBA in the state of Kentucky? If a Sub S already exist but wants to sell its product under another name must the Sub S create a new entity to operate under a DBA registration?
  • im in Idaho i know by state laws change a bit but this also

    im in Idaho i know by state laws change a bit but this also is a more general question. i know how franchises work and how licensing works to some extent. here is my question. if Im waiting to start several business under the same brand name but every time i open one I'm partnering with someone to run said branch......would that be considered a fanchise as I'm charging no fee....and the bigger part of it is I'm paying for all the supplies and equipment need for running the business. the other guy pays the smaller bills like small day to day supplies to keep the place running......would that be considered a franchise? would i be subject to those laws ? i can't afford to franchise note do i wish to as i wish to have ownership stake in each branch in case any one i partner with is under performing......also if it does fall under franchise law do you have any other suggestions on how i can accomplish what I'm trying to? with my growth
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