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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.
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Recent Franchise Questions

  • I am a retail music store owner. Nearly 18 years ago I entered

    I am a retail music store owner. Nearly 18 years ago I entered into an express contract with a major instrument rental franchise, paying money to become an affiliate. As part of the contract the major instrument rental franchise mother company provides literature and other support features, which up until the past few years have included the use of paper brochures called rental information brochures. A handful of years ago the mother company changed their ownership structure (the owner took in another partner), but no affiliate contracts were effected or altered (per a letter sent to affiliates such as myself, specifying no changes for affiliates). Afterward the mother company launched a website, ASKING affiliates to promote it. THE WEBSITE SPECIFICALLY HAD SECTIONS RECRUITING AFFILIATES. I contacted the mother company and commented that they were FORCING my business to advertise and recruit for them, in competition with my own franchise affiliate business (a matter that had already been in discussion when they "sold" a center of my "territory" to another dealer, a matter which was eventually resolved only after that dealer closed it's business due to family death - in other words a topic never satisfactorily resolved by the mother company, in my opinion). My complaint about being forced to promote a website that advertised recruitment was not addressed. As time passed ALL MATERIALS (paper literature, tags on all rental instruments, company stickers) all bear the website of the mother company, who recruits dealers THROUGH that same website. I wrote another letter to the company, explaining that I believed that it could be illegal, and a breach of contract for the company to FORCE me to advertise in ways which allowed no opt-out regarding recruiting, because as a matter of course I could not remove tags, stickers or their website address which appeared on all support materials. UNDER THE TERMS OF OUR ORIGINAL CONTRACT I AM NOT PERMITTED TO CREATE MY OWN COMPANY TAGS, CONTRACTS OR SUPPORT MATERIALS BEARING COMPANY LOGO. At this time, in order to advertise I must use materials that also serve to recruit competitors in my area (contrary to my desire, and directly in competition with my own business). The company then promoted affiliate "micro-sites", which were supposed to be a support tool for affiliates to inform our customers about our rental franchise "on line". The reason I am contacting a lawyer today is that the microsite boasts a "widget". My own music store website can link to my affiliate instrumental microsite using this widget. ONCE ON THE MICROSITE THE MOTHER COMPANY directs customers that I drove to MY MAIN STORE WEBSITE to THEIRE WEBSITE, and there is no way "back" to our store page, instead navigation is set up to promote an environment where my CUSTOMERS, NOSEY LOCAL COMPETITORS or ANYONE visiting my webpage will be driven ONLY to the mother company site (over which I have no control) and then navigation is designed to lead them to all of the elements of that site, INCLUDING THE RECRUITMENT TABS. In other words, if I want to be an affiliate I have NO CHOICE that does not result in my being forced (with out compensation) to recruit for the mother company that I have an affiliate franchise under. IS THIS LEGAL? They are ignoring my letters of concern.
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